Re: [Pen-l] labor and the auto companies

["Robert Naiman" <naiman@xxxxxxxxxxxxxxxxxxxxx>]

What about the part of the story that part of the costs of GM is
health care benefits that in Canada would be paid by the government?

Wouldn't it make sense, as part of the restructuring, to transfer the
health care costs of the workers and retirees to the government? Isn't
the government supposed to be doing universal health care anyway? Why
should health care costs be part of the economics of GM in the US when
it isn't part of the economics of GM in Canada?

On Wed, Nov 19, 2008 at 11:49 PM, Rudy Fichtenbaum
<rudy.fichtenbaum@xxxxxxxxxx> wrote:
> We keep hearing from conservatives and even a number of liberal commentators
> that the reason the big three auto companies are not competitive is because
> of high labor costs due to the fact that their workers are unionized. I just
> looked at Compensation (Payroll plus Benefits) as a percent of the Value of
> Shipments for Automobile and Light Duty Motor Vehicle Manufacturing  in the
> Annual Survey of Manufacturers. Compensation for all workers, not just
> production workers is about 7.2% of the Value of Shipments. Of course this
> includes both transplant as well as the "big three." Assume for a moment
> that GM, Ford and Chrysler accounted for 50% of auto sales and their labor
> cost was 50% higher than the transplants. That would imply that Compensation
> for the big three was about 9% of sales compared to 6% for the transplants.
> That would make labor costs about 7.5% for the industry average. If that
> were the case and we cut labor costs at the big three in half that would
> reduce the cost of producing an automobile by 4.5%. Does anyone seriously
> believe that this would make the big three competitive?
>
> Doesn't this expose the myth that the problems of the big three are due to
> high labor costs? Am I missing something?
>
> Rudy
>
> --
> Rudy Fichtenbaum
> Professor of Economics & Chief Negotiator AAUP-WSU
> Department of Economics
> Wright State University
> Dayton, OH 45435
> Phone: 937-775-3085
> Fax: 937-775-2441
>
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-- 
Robert Naiman
Just Foreign Policy
www.justforeignpolicy.org
naiman@xxxxxxxxxxxxxxxxxxxxx

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