Toyota Sweats U.S. Labor Costs

[MichiganTruck_Mafia]

http://www.freep.com/apps/pbcs.dll/article.../702080429/1014

 

 

 

Toyota sweats U.S. labor costs

INTERNAL REPORT: Slow the pay growth by 2011

 

February 8, 2007

 

BY JASON ROBERSON

 

FREE PRESS BUSINESS WRITER

 

Toyota Motor Corp. must hold down growth of its U.S. manufacturing wages and benefits, which are among the highest in the auto industry and are growing faster than the company's profit margin, according to a high-level company report obtained by the Free Press.

 

The report from Seiichi (Sean) Sudo, president of Toyota Engineering & Manufacturing in North America, said Toyota should strive to align hourly wages more closely with prevailing manufacturing pay in the state where each plant is located, "and not tie ourselves so closely to the U.S. auto industry, or other competitors."

 

Sudo's report to top managers said the Japan-based company projected a $900-million increase in U.S. manufacturing compensation by 2011, and human resources officials were working on trimming that by one-third.

 

The drive to hold down costs may boost UAW organizing efforts, if Toyota workers balk at the possibility of smaller raises, reduced benefits or greater demands for productivity gains. But the plan also illustrates that the world's most-profitable automaker is going to keep relentless pressure on Detroit and its signature industry.

 

The Free Press reported last week that at least some nonunion Toyota workers for the first time last year earned more than UAW assembly workers for Detroit's automakers.

 

Auto experts and Toyota's workers say it is ingrained in Toyota's culture to sweat over trying to save $300 million five years down the road even as the company rakes in more than $1 billion a month.

 

"They worry about details. They never stop worrying," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "They encourage worrying in the company, from the top down."

 

The root of Sudo's worry: Labor costs as a percentage of sales are growing faster than Toyota's profit margin.

 

"This condition is not sustainable in the long term," he said in the report.

 

But Toyota's plans to restructure wages and benefits may also embolden Detroit's struggling automakers, which will seek billions in concessions this summer during contract negotiations with the UAW. A recent Detroit Free Press-Local 4 Michigan Poll found that three-quarters of Michiganders say the UAW will have to make concessions to General Motors Corp., Ford Motor Co. and the Chrysler Group.

 

"The companies in Detroit are going to say, 'Look, we're in dire straits here. We're going to have to follow what they do,' " said Kenny Harper, 48, who has 18 years' seniority at Toyota's flagship complex in Georgetown, Ky.

 

Harper, who wants the UAW to represent Toyota workers, said he disagrees with the company on principle.

 

"Now I can understand if the company is having a hard time," said Harper, who has been off work for 12 weeks while healing from shoulder surgery after an on-the-job injury. "I'm more than willing to work with that company to keep my job. But when they just take it because they want more, I don't agree with it at all."

 

Sudo's 42-page report, which was left unsecured on computers at the Georgetown plant, says, "The U.S. auto industry pays among the highest manufacturing wages in the world. Compared with Japan and France, the U.S. auto industry pays 50% higher wages and over five times more than Mexico's auto manufacturers."

 

The company acknowledged that the documents supplied to the Free Press were authentic.

 

In a memo to workers at the plant after the report was circulated, Toyota noted that workers at Georgetown earned $3 an hour more than the U.S. auto industry standard. The Free Press reported last week the workers averaged $30 an hour, including bonuses.

 

Currently, the median for comparable manufacturing jobs in Kentucky -- half earn more, half earn less -- is $12.64, according to the U.S. Department of Labor.

 

Toyota's strategy resembles what Hyundai Motor Co. uses at its plant in Montgomery, Ala. Assembly workers there make $14 an hour, about half the wages, bonuses and benefits of Toyota, Honda, Nissan and Detroit's automakers. But Hyundai's wages still are considerably higher than for comparable Alabama jobs, which pay $10.79 an hour.

 

"Our challenge will be how to educate team members and managers about our condition, so that they can understand and accept change," Sudo said in the report.

 

Among the changes would be greater use of on-site medical clinics and the introduction of on-site pharmacies to combat rising health care costs. Toyota's language regarding North American health care inflation largely echoes that of Detroit's automakers.

 

The issues and solutions were laid out in a plan that also addressed quality, development of people and suppliers and the 5-year production plan. The idea behind such a so-called hoshin plan is to ensure all employees understand and work toward the same long-term goals.

 

Richard Mason, 45, who works the second shift at Toyota's Georgetown plant, said few of his coworkers seemed concerned about Toyota's plans.

 

"Most people I talk to in the plants say it's no big deal, which saddens me," said Mason, who also wants union representation. "They say, 'Hey, I've got it made now. I don't really care.' "

 

But Harley Shaiken, a professor at the University of California, Berkeley, who specializes in labor issues, said Toyota's effort to hold down labor costs does more than empower Detroit's automakers: It promotes Toyota as the industry's new labor leader.

 

Nonunion automakers, with the exception of Hyundai, followed the UAW's lead to avoid unionization, Shaiken said.

 

"It really represents a shift in direction," Shaiken said. "Up until now the UAW set wages for the industry and the talks in Detroit."

 

In the follow-up memo, Toyota pointed out that workers at Georgetown and at New United Motor Manufacturing Inc. in Fremont, Calif., which Toyota owns with GM, are the highest-paid autoworkers in the United States.

 

UAW Local 2244 President George Nano, who represents members at Fremont, the only plant where Toyota managers must negotiate with the UAW, said Toyota is just being greedy.

 

His members, he said, are struggling to make ends meet in California's expensive Bay area, and he is afraid that cuts are coming.

 

"Right now we're making good money. We have benefits. But you can see that it's coming," Nano said about the anticipated changes. "And I'll be damned if I'm going to let them take it away."

[nonvalue]

It's trickle down 101..... Supply and Demand.... other Auto Companies are asking for reductions, Why shouldn't Toyodie get thiers, kick the dog when its down. This is Show Business NOT Show Friends

 

Hey didn't the Air lines and Delphi do the same thing. Almost like they have this universal playbook and their playing it play by play. Word of advice to American Public EXPECT RIPPLE EFFECTS THROUGH THE ECONOMY.... Those damn auto workers

[iluvford]

Looks like they are going to have to pay the cost to be the boss. Cheap Japs. :reading:

[Harry Bennet]

http://www.freep.com/apps/pbcs.dll/article.../702080429/1014

Sudo's 42-page report, which was left unsecured on computers at the Georgetown plant, says, "The U.S. auto industry pays among the highest manufacturing wages in the world. Compared with Japan and France, the U.S. auto industry pays 50% higher wages and over five times more than Mexico's auto manufacturers."

 

Toyota's strategy resembles what Hyundai Motor Co. uses at its plant in Montgomery, Ala. Assembly workers there make $14 an hour, about half the wages, bonuses and benefits of Toyota, Honda, Nissan and Detroit's automakers. But Hyundai's wages still are considerably higher than for comparable Alabama jobs, which pay $10.79 an hour.

 

"

to answer the question , yes

If people will build cars/trucks for $14/hr, then the going rate is $14/hr

this is manual labor, where nearly any warm body is as good as the next.

The is the customers' preception, not exclusively mine.

the Mexican Focus is just as good as a Mich Ave built Focus

the only difference is Ford made money on the Mexican-built one and lost money on the one built at Wayne

AGAIN, Americans buying/leasing cars/trucks want the best value for the money

They do not and will not care that you or I or Mr. Harper have 20 years of seniority

The managment at Toyota is very likely the best in this business, (why I say this? 'cuz they are making money!! is there some other yardstick to measure success?!?!)

If they believe they need to get to $14/hr for manual labor, THEY WILL DO IT

They CAN and WILL leave the US to do it, too

Now you still think Steve Miller was wrong?

Toyota agrees with him,

hmm?

I wonder where he'll go next after Delphi

Edited February 9, 2007 by Harry Bennet

[mrballsonya]

This race to the bottom (U.S. wages) may seem like a good idea right now, but what these companies don't realize is they're eroding the very market in which they sell.

 

Wal-mart is the biggest offender and the originator of this flawed sales logic. Basically, by outsourcing all these good paying manufacturing jobs these companies get a couple good years of cheap products and a strong market (U.S. manufacturers haven't laid-off all their workers yet), but as soon as these workers don't have a job and are paying $3.00 a gallon for gas... guess what..? they won't be spending their money on that bargain $30 Chinese made bike. I'm oversimplifying this, but I hope you can catch my drift.

 

Here's an interesting article.. with comments for and against outsourcing.

 

http://news.thomasnet.com/IMT/archives/200....html?t=archive

 

In my opinion we WILL NOT continue to be a super power with the current migration of manufacturing jobs to China.

[ACH'ER]

This race to the bottom (U.S. wages) may seem like a good idea right now, but what these companies don't realize is they're eroding the very market in which they sell.

 

Wal-mart is the biggest offender and the originator of this flawed sales logic. Basically, by outsourcing all these good paying manufacturing jobs these companies get a couple good years of cheap products and a strong market (U.S. manufacturers haven't laid-off all their workers yet), but as soon as these workers don't have a job and are paying $3.00 a gallon for gas... guess what..? they won't be spending their money on that bargain $30 Chinese made bike. I'm oversimplifying this, but I hope you can catch my drift.

 

Here's an interesting article.. with comments for and against outsourcing.

 

http://news.thomasnet.com/IMT/archives/200....html?t=archive

 

In my opinion we WILL NOT continue to be a super power with the current migration of manufacturing jobs to China.

 

 

 

You are absolutley right, we will no longer be a super power. Japan, South Korea and China have bought most of our debt, so we have to play by their rules. These countries could bankrupt our country because they hold our mortgage, so to speak, and if they ever demanded that our debt be paid in full, this country would be bankrupt. They would never do this of course, because by holding most of our debt, they can set their own rules. (Currency munipulation, Japan and South Korea not allowing us to build factories in their country and taxing the hell out our cars when they do let us export them to their country). As long as they are allowed to play be these rules and simple minded Americans keep lining up to buy their cars, our days as a super power are numbered. You cannot be a super power without a strong middle class and our middle class is dying.

[289hipo]

You are absolutley right, we will no longer be a super power. Japan, South Korea and China have bought most of our debt, so we have to play by their rules. These countries could bankrupt our country because they hold our mortgage, so to speak, and if they ever demanded that our debt be paid in full, this country would be bankrupt. They would never do this of course, because by holding most of our debt, they can set their own rules. (Currency munipulation, Japan and South Korea not allowing us to build factories in their country and taxing the hell out our cars when they do let us export them to their country). As long as they are allowed to play be these rules and simple minded Americans keep lining up to buy their cars, our days as a super power are numbered. You cannot be a super power without a strong middle class and our middle class is dying.

STANDING OVATION

[OAC_Sparky]

The managment at Toyota is very likely the best in this business, (why I say this? 'cuz they are making money!! is there some other yardstick to measure success?!?!)

That is an opinion that is subjective at best.

 

http://www.blueovalforums.com/forums/index...showtopic=10203

 

This would mean that Ford's management is best in the business, as many of them are still here.

[ebritt]

All you Toyota employees better start watchin your paycheck real close....

 

[cobra6603]

You are absolutley right, we will no longer be a super power. Japan, South Korea and China have bought most of our debt, so we have to play by their rules. These countries could bankrupt our country because they hold our mortgage, so to speak, and if they ever demanded that our debt be paid in full, this country would be bankrupt. They would never do this of course, because by holding most of our debt, they can set their own rules. (Currency munipulation, Japan and South Korea not allowing us to build factories in their country and taxing the hell out our cars when they do let us export them to their country). As long as they are allowed to play be these rules and simple minded Americans keep lining up to buy their cars, our days as a super power are numbered. You cannot be a super power without a strong middle class and our middle class is dying.

 

 

AMEN but all the Sheepeople in this country wont see it in time to fix it or the greed in big bussness wont let it be fixed . :reading:

[TCAP'er]

Fuck toyota, fuck all jap crap, fuck all korean trash, fuck all all chinese junks, fuck european wussies shit, fuck'em all, BUY THE REAL AMERICAN. Guessed who was the first landed on the moon, and who is making regular trip to space station, build the best fighter/bomber planes, pick up trucks, semi trucks, motorcyles (Harley Davidson), want me to go on and on and on and on???? and you think the jap,korean,chinese and the european can build better products than the US, give me a FUCKEN break. What the dumb fuck planet are you jap crap lovers comming from anyway?

Edited February 10, 2007 by TCAP'er

[GuyfromSTAP]

Fuck toyota, fuck all jap crap, fuck all korean trash, fuck all all chinese junks, fuck european wussies shit, fuck'em all, BUY THE REAL AMERICAN. Guessed who was the first landed on the moon, and who is making regular trip to space station, build the best fighter/bomber planes, pick up trucks, semi trucks, motorcyles (Harley Davidson), want me to go on and on and on and on???? and you think the jap,korean,chinese and the european can build better products than the US, give me a FUCKEN break. What the dumb fuck planet are you jap crap lovers comming from anyway?

 

Wonder if they spell better?

[Ovaltine]

Fuck toyota, fuck all jap crap, fuck all korean trash, fuck all all chinese junks, fuck european wussies shit, fuck'em all, BUY THE REAL AMERICAN. Guessed who was the first landed on the moon, and who is making regular trip to space station, build the best fighter/bomber planes, pick up trucks, semi trucks, motorcyles (Harley Davidson), want me to go on and on and on and on???? and you think the jap,korean,chinese and the european can build better products than the US, give me a FUCKEN break. What the dumb fuck planet are you jap crap lovers comming from anyway?

 

Wow....... that was so articulate, I'm almost speechless.

 

I feel like I just heard the speech at the beginning of Patton! The only part missing was the section where you tell us that you don't win economic wars by buying vehicles made by non-U.S. manufacturers, but by making those poor dumb bastards buy U.S. corporate built vehicles.

 

 

 

-Ovaltine

[Imawhosure]

All this is just posturing by Toyota, to see how much money Ford and GM save when the new contract is written.

 

They are just going to go and calculate the savings after it is announced, then force their employees to give that much, plus 1 cent, to expand their advantage.

 

While it may very well be illegal, (and I would never want Ford to do anything illegal) I would somehow funnel money to the UAW for the express purpose of unionizing these offshore plants. While Ford will be happy to cut costs by taking from us, it will not improve their competitive position if their adversaries are able to do the same, and then some.

 

If/when Toyoty cuts into their employees pay to regain the advantage, this will be the BEST opportunity in years to get their workforce on board.

 

Remember, Fords problem is NOT our compensation perse, but the fact that their adversaries compensation allows them to make oddles of money at the sales threshold. When they try and match, they are forced to sell at a loss.

 

If we as a group understand this, then we must also realize that if WE MUST take a loss somewhere in our contract, that the only way to STOP it in the future from happening again is...............to insure all companys fixed costs are the same.

 

That is the realm of the UAW and not Ford, and the sooner we come to this realization and start demanding proper action and holding the right partys responsible, the sooner we can send our compensation in the correct direction...........and that would NOT be down!!!

[dark270]

Wow....... that was so articulate, I'm almost speechless.

 

I feel like I just heard the speech at the beginning of Patton! The only part missing was the section where you tell us that you don't win economic wars by buying vehicles made by non-U.S. manufacturers, but by making those poor dumb bastards buy U.S. corporate built vehicles.

 

-Ovaltine

:hysterical: :hysterical:

[davdog]

All this is just posturing by Toyota, to see how much money Ford and GM save when the new contract is written.

 

They are just going to go and calculate the savings after it is announced, then force their employees to give that much, plus 1 cent, to expand their advantage.

 

While it may very well be illegal, (and I would never want Ford to do anything illegal) I would somehow funnel money to the UAW for the express purpose of unionizing these offshore plants. While Ford will be happy to cut costs by taking from us, it will not improve their competitive position if their adversaries are able to do the same, and then some.

 

If/when Toyoty cuts into their employees pay to regain the advantage, this will be the BEST opportunity in years to get their workforce on board.

 

Remember, Fords problem is NOT our compensation perse, but the fact that their adversaries compensation allows them to make oddles of money at the sales threshold. When they try and match, they are forced to sell at a loss.

 

If we as a group understand this, then we must also realize that if WE MUST take a loss somewhere in our contract, that the only way to STOP it in the future from happening again is...............to insure all companys fixed costs are the same.

 

That is the realm of the UAW and not Ford, and the sooner we come to this realization and start demanding proper action and holding the right partys responsible, the sooner we can send our compensation in the correct direction...........and that would NOT be down!!!

 

The reason toyota can make so much money is becuase the big 3 made the margins so fat on the sale of vehicles that any company that came in with a competitive game plan was going to make tons of money. The big 3 had a monoply and stuck it to the consumer. 40k for a decent vehicle, yet I can get a house for $160k, yeah they weren't making some hefty profits on those sales. The US auto industry got fat and happy, and while the were getting all happy and giddy competition snuck in the back door. If you hear any music in the background that's the piper and it's the US auto industry's turn to pay his bill.

[Goober]

undefined Read #10

[The_Economist]

The employees pay is not too large, Toyota's greed is.

 

Yeah... it's almost as if a company exists to make as much money for their shareholders as they can. And, anyone who disagrees with this I will call a hyprocrite. If you do disagree with my statement, ask yourself this: do you have a 401K? If you do, why? And, if you had Ford stock in your 401K, are you upset that the value went down? Hmmm....

Edited February 10, 2007 by The_Economist

[Imawhosure]

The reason toyota can make so much money is becuase the big 3 made the margins so fat on the sale of vehicles that any company that came in with a competitive game plan was going to make tons of money. The big 3 had a monoply and stuck it to the consumer. 40k for a decent vehicle, yet I can get a house for $160k, yeah they weren't making some hefty profits on those sales. The US auto industry got fat and happy, and while the were getting all happy and giddy competition snuck in the back door. If you hear any music in the background that's the piper and it's the US auto industry's turn to pay his bill.

 

Dav, as usual you are talking apples and oranges.

 

I am not going to debate with you the here for, how come; rather I am going to tell you as I would anyone else--------------->the UAW has been worthless for years, was fat, dumb, and happy. But if they figure out a way to unionize the offshore plants, your happiness will disappear.

 

You can say whatever you like........and I am sure you will, but just like us their pay has been escalating, now it is gonna take a hit. Nobody in their right mind likes it; even if a guy named davdog tries to explain what a wonderful thing it is!!!! They will consider retalliation.

 

If; and only IF the UAW gets their heads out of their asses........along with my compatriots at other UAW plants who see the light and demand the UAW does it at all costs, your scenario of the downward spiral will stop.

 

The only thing I want to know is-------->why when reading between the lines, do virtually all of us see you relish our race to the bottom? We have done nothing to you, and Toyota and Honda charge as much or more for their vehicles, and build them for less. How is that helping anyone save money?

 

Now, if you want to buy a Kia or hyundai, I can understand your point. But from where I am sitting, you would rather pay moooooore, much more, and have the company make huge profits, rather than have the employees make a pretty good wage.

 

Detroit was fat?????? I know you check stock prices and the wall street journal just by reading your posts.

 

If Detroit was fat according to you, then I guess this means Toyoty has gout!!!!!!!!!

 

Either that, or as we all surmise, you enjoy watching your home grown companys struggle, along with their employees get taken down a notch.

 

Hey by the way, are you over 5 foot 4? If not, it explains everything, lololololol!!!!!!!!!

[Harry Bennet]

All this is just posturing by Toyota, to see how much money Ford and GM save when the new contract is written.

 

They are just going to go and calculate the savings after it is announced, then force their employees to give that much, plus 1 cent, to expand their advantage.

 

While it may very well be illegal, (and I would never want Ford to do anything illegal) I would somehow funnel money to the UAW for the express purpose of unionizing these offshore plants. While Ford will be happy to cut costs by taking from us, it will not improve their competitive position if their adversaries are able to do the same, and then some.

 

If/when Toyoty cuts into their employees pay to regain the advantage, this will be the BEST opportunity in years to get their workforce on board.

 

Remember, Fords problem is NOT our compensation perse, but the fact that their adversaries compensation allows them to make oddles of money at the sales threshold. When they try and match, they are forced to sell at a loss.

 

If we as a group understand this, then we must also realize that if WE MUST take a loss somewhere in our contract, that the only way to STOP it in the future from happening again is...............to insure all companys fixed costs are the same.

 

That is the realm of the UAW and not Ford, and the sooner we come to this realization and start demanding proper action and holding the right partys responsible, the sooner we can send our compensation in the correct direction...........and that would NOT be down!!!

uhh. . .sure but NOT the UAW

If I were at Toyota and just saw the UAW feed a big shit sandwich to its rank and file and then get fed the same sandwich at Toyota, sure I'd me hopping mad and I'd want a union, BUT NOT THE UAW!!!

There are a lot of unions out there, I'm sure quite a few of them can do a better job getting results for the rank file, more than this UAW

THis spilt in the AFL-CIO should have already produced another contender to organize Toyota, Honda, and Nissan. let's watch and see who it is

[Imawhosure]

uhh. . .sure but NOT the UAW

If I were at Toyota and just saw the UAW feed a big shit sandwich to its rank and file and then get fed the same sandwich at Toyota, sure I'd me hopping mad and I'd want a union, BUT NOT THE UAW!!!

There are a lot of unions out there, I'm sure quite a few of them can do a better job getting results for the rank file, more than this UAW

THis spilt in the AFL-CIO should have already produced another contender to organize Toyota, Honda, and Nissan. let's watch and see who it is

 

Harry, you do have a point!!!! Excellent observation, and a new union would not be as nearly corrupt as the old.

 

We shall see how it shakes out.

[unionj]

Harry, you do have a point!!!! Excellent observation, and a new union would not be as nearly corrupt as the old.

 

We shall see how it shakes out.

Look at what the UAW did to get NAP closed so as to save family members jobs in MI.

[Hard Driver]

Whenever I need to be amused I stop by the forums here.

 

Such a bunch of worthless babble by so many "experts"

[mulewright]

uhh. . .sure but NOT the UAW

If I were at Toyota and just saw the UAW feed a big shit sandwich to its rank and file and then get fed the same sandwich at Toyota, sure I'd me hopping mad and I'd want a union, BUT NOT THE UAW!!!

There are a lot of unions out there, I'm sure quite a few of them can do a better job getting results for the rank file, more than this UAW

THis spilt in the AFL-CIO should have already produced another contender to organize Toyota, Honda, and Nissan. let's watch and see who it is

You've been telling us that the reason US automakers aren't competetive is because our UAW wages are so out of line with the transplants, now here it is in black and white that Toyota workers in fact make more the UAW workers..... hmmmm

[unionj]

If the union was out to save family members jobs in MI, then why were people from NAP allowed to take some of those jobs by transfers?

 

NAP was closed for one reason. The same reason AAP closed. The same reason TCAP is scheduled to close. It was too far from the center of Ford's universe, which is Dearborn, MI.

 

Stop being bitter and move on with your life. Your posts used to mean something, but nowadays all you do is whine like a baby.

Just found out some more info that's all. Do some digging and ask some questions and the truth might surprise you. First ask why the International was not at any of the meetings with the City and State representatives when they pleaded our case with Ford. Ask if Michigan truck was slated by Ford to close leaving NAP operational for the time being.

The centralization answer is horseshit as no executive worth his salt would close a cash cow to get production closer to home office.

Also NAP built the #1 selling vehicle in the USA so the reason is way different than AAP and TCAP. You are smarter than that answer!

The UAW had more to do with the decision than is being told but many peoples careers would be in jeopardy if the truth leaked, but it will eventually.

The story I heard was once the UAW found out about which plants were on the list they fired back at Ford saying why don't you close NAP why these plants in MI? Well the reason was NAP's performance as a whole

made them profitable but Ford decided to call the UAW's bluff and said ok NAP will close.

Ask around, dig a bit and see what you come up with.

 

As for being bitter yes I am it is only human.

Also the transfer thing is just a front as they knew the majority would not move to one of the most derelict areas of the country. If a transfer option to Kansas City had been offered the numbers would have doubled.