US workers' wages are not causing the economic failures of big companies

I'm sick of seeing everyone blame the US workers' wages as a reason for failing companies.

It's the MISMANAGEMENT of the top excutives and the continued mismanagement by on down the line that is causing these failures.

The problem with Walmart is not so much it's hiring practices as it's purchasing policies.

Hence the expression 'walmartization of the supply chain'. Their policy dictates all suppliers cut their costs by a certain percentage often forcing suppliers to switch manufacturing off shore.

If your main job were working for Black and Decker for instance, Walmart might be the reason you had to get a second job in the first place.

Original Post by clairelaine:

Michael Moore's 1989 film, Roger & Me, looked at this in detail.  He makes a good point that the big three auto companies failed to listen to consumer needs and continued making obsolete cars.  They didn't even seem to notice that people were asking for lower mileage and more safety features.  Then they began moving operations to Mexico and elsewhere and laying off American workers, using high wages as an excuse.  I know he was on TV talking about it but can't find the video or news report.  Will edit to add if I can.

Found it http://www.youtube.com/watch?v=NHKAbPwaXho

 Actually, Roger & Me didn't look at the issue of the quality of American cars at all.  It was more about GM's lack of loyalty to the workers in Flint, Michigan.

Michael Moore argues that GM invested in other, high-tech areas and convinced the UAW that they were broke to get layoffs approved.

I can't believe no one has brought up the fact that the main reason the labor costs so much here is because we, unlike pretty much every other "civilized" country, do not have universal health care.  The company has to pick up that tab.

Original Post by rachd:

I went back to find some numbers for you....

in 2006, widely available industry and Labor Department statistics placed the average labor cost for UAW-represented workers at the former DaimlerChrysler at $75.86 per hour. For Ford it was $70.51, he said, and for General Motors it was $73.26.
 
“That includes the hourly pay, plus the benefits they’re receiving and all the other costs to General Motors, Ford and Chrysler, including legacy costs – retirement costs, pensions, and so on – so it’s looking at the total labor costs per hour worked for workers,” Perry said.
 
For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44.

A gap in per worker cost of ~$30/hr has to have some impact, does it not? Like I said, I don't think it's the total blame, but it is a contributing factor.

 You and some other poster on other threads, keep repeating the same mantra. Union contracts, high union wages. This might be a small piece of the pie, but most of you AND the TOP EXECUTIVES of the companies are making it out to be a huge piece of the pie. IT ISN'T. It is one of the easiest things to point to because it is easy to compare these figures.

Original Post by sybil878:

Original Post by nomoreexcuses:

Original Post by r4eboxer:

What about the markets in other countries. We allow countries to bring in their products but American made products have a hard time finding their way into foreign markets.

DINGDINGDING!

we have a winner, folks

 Uhhh might that be because American products are over priced? I'd rather by a ___ made in Japan for half the price ... it's not just the auto industry.

If you want to make the same wage as the upper management in these companies, go get your MBA and go get an upper management job. The fact is that a labourer is costing these companies $73/hr - this is an employee with no required education except maybe a high school diploma.

 Agreed!  American's working for Toyota for example received a little more than half that, still not bad for unskilled labor. 

kgator - No it was because I wanted to pay off a car early.  After that I stayed a little longer because I liked the extra money and the 10% discount card

Original Post by sybil878:

Uhhh might that be because American products are over priced? I'd rather by a ___ made in Japan for half the price ... it's not just the auto industry.

If you want to make the same wage as the upper management in these companies, go get your MBA and go get an upper management job. The fact is that a labourer is costing these companies $73/hr - this is an employee with no required education except maybe a high school diploma.

I've worked with all levels of management over the years. The higher up one goes in a company, there is more advanced education found. However, advanced education does not mean these people are actually any smarter or any better than the people who do assembly. Many of the management IDIOTS I have worked for could barely tie their own shoes and had to have their secretaries and admins do everything for them.

These MBA's also don't guarantee that the top managers will make good decisions. Just look at the financial industry and the car makers. Most of them have MBA's and have a horrible track record for making decisions. 

Original Post by caverlady:

 Agreed!  American's working for Toyota for example received a little more than half that, still not bad for unskilled labor. 

 They aren't PAID $74/hour ... you do realize that, right? 

Without all those 'unskilled' workers, there would be no company - lost would be the basic balance of power that ensures a healthy company, a healthy tax base and healthy middle class....

no wait....

that's right, we can simply send those 'unskilled' jobs off to Mexico; and create an economy based solely on the working poor and wealthy. :/

Sounds great. Where do I sign up?

Sure they are, just because they don't recieve that on their paychecks doesn't mean that they aren't getting that amount - it's all part of their total compensation package. They recieve the health care benefits. They recieve their pension in retirement. Those are real cost to the company that the employee gets. Just because it isnt' on their paycheck doesn't mean that they aren't recieving it.

And to the poster above, no not every person with an MBA will always make the best decision - there will be good and bad people in every profession, senior management, health care, dentist, every industry has their good and bad. But if you truely feel that all those in the financial industry with their MBA's don't know anything then feel free to take your retirement savings plan or your pension to the janitor cleaning the toilets in the automotive manufacturing shop and ask him to run your investment plan.

It's a good thing we've set ourselves up as the World Police - at least that's one marketable skill that won't be outsourced.

Original Post by caverlady:

Original Post by sybil878:

Original Post by nomoreexcuses:

Original Post by r4eboxer:

What about the markets in other countries. We allow countries to bring in their products but American made products have a hard time finding their way into foreign markets.

DINGDINGDING!

we have a winner, folks

 Uhhh might that be because American products are over priced? I'd rather by a ___ made in Japan for half the price ... it's not just the auto industry.

If you want to make the same wage as the upper management in these companies, go get your MBA and go get an upper management job. The fact is that a labourer is costing these companies $73/hr - this is an employee with no required education except maybe a high school diploma.

 Agreed!  American's working for Toyota for example received a little more than half that, still not bad for unskilled labor. 

kgator - No it was because I wanted to pay off a car early.  After that I stayed a little longer because I liked the extra money and the 10% discount card

#1 - those are not unskilled workers - blue collar does NOT mean unskilled

#2 - other countries, especially Asian countries, impose tarriffs on our manufactured products whereas we do not place any tarriffs on theirs, not that we make anything here anymore -- all we export now is food

#3 - i'm not sure that the source you sited is necessarily reliable -- i'll look for something else to corroborate your numbers about labor cost:

about CNS News from wiki:

The CNSNews.com (or Cybercast News Service) is an American news websiteMedia Research Center. It was founded on June 16, 1998 under the name "Conservative News Service" ; "Conservative" was changed to "Cybercast" in 2000 after the MRC was unable to trademark the name "Conservative News Service...

Given the recent shenanigans on Wall Street the janitor might do a better job.

Using Black and Decker as an example of the problem, Caver - not meant to imply that was your personal reason for joining the Walmart team. :)

Original Post by moonikins:

Original Post by rachd:

I went back to find some numbers for you....

in 2006, widely available industry and Labor Department statistics placed the average labor cost for UAW-represented workers at the former DaimlerChrysler at $75.86 per hour. For Ford it was $70.51, he said, and for General Motors it was $73.26.
 
“That includes the hourly pay, plus the benefits they’re receiving and all the other costs to General Motors, Ford and Chrysler, including legacy costs – retirement costs, pensions, and so on – so it’s looking at the total labor costs per hour worked for workers,” Perry said.
 
For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44.

A gap in per worker cost of ~$30/hr has to have some impact, does it not? Like I said, I don't think it's the total blame, but it is a contributing factor.

 You and some other poster on other threads, keep repeating the same mantra. Union contracts, high union wages. This might be a small piece of the pie, but most of you AND the TOP EXECUTIVES of the companies are making it out to be a huge piece of the pie. IT ISN'T. It is one of the easiest things to point to because it is easy to compare these figures.

 Ok. Then please provide some other numbers. You can't argue that $30/hr/worker (or over 40% more than Toyota's labor cost) isn't alot of money.

I'm more than willing to be conviced that the union and the current contracts aren't a big 'piece of the pie' as you say, but I have to see some facts, I can't be convinced by emotion and yelling via keyboard.

Of course the Top Execs are idiots flying around in private jets. Another reason to declare bankruptcy and clean house.

I've studied "The Toyota Way", been to one of their plants, seen how they run their business. They are brilliant, no wonder they are kicking butt and taking names.

The big3 are too tied in the old ways...which include execs and corporate jets, and union contracts that are costing them an extra ~40% per hourly worker.

Original Post by sybil878:

Sure they are, just because they don't recieve that on their paychecks doesn't mean that they aren't getting that amount - it's all part of their total compensation package. They recieve the health care benefits. They recieve their pension in retirement. Those are real cost to the company that the employee gets. Just because it isnt' on their paycheck doesn't mean that they aren't recieving it.

 *forehead smack*

*head desk*

*sites some resources in his pants pocket*

I'm not sure how to even approach pointing out the difference in costs of the salaries, perks and benefits of the top executives and upper level management between the big 3 automakers and the Japanese automakers. The playing field is so very different. There is not easy access to all of those figures, which is why so many people harp on the union wages as the cause. It is easy to see the difference.

Original Post by moonikins:

I'm not sure how to even approach pointing out the difference in costs of the salaries, perks and benefits of the top executives and upper level management between the big 3 automakers and the Japanese automakers. The playing field is so very different. There is not easy access to all of those figures, which is why so many people harp on the union wages as the cause. It is easy to see the difference.

 Actually, the salaries of top execs are public knowledge for publicly traded companies, you can find it on google.finance.  I'll look for the numbers...

However, another way to look at is....how many top execs are there in comparison to how many hourly workers? It would be interesting to compare total cost to total cost.

edited for clarity

Original Post by yachtracer1977:

Original Post by sybil878:

Sure they are, just because they don't recieve that on their paychecks doesn't mean that they aren't getting that amount - it's all part of their total compensation package. They recieve the health care benefits. They recieve their pension in retirement. Those are real cost to the company that the employee gets. Just because it isnt' on their paycheck doesn't mean that they aren't recieving it.

 *forehead smack*

*head desk*

 Ah, so the employee should be entitled to these benefits just for showing up for work and the company should just pay them and not factor it into the cost of employment? We are talking about running a business here, not a government that just prints more money when they run out.

And yes, the upper management of these 3 companies are also irresponsible in what they pay themselves ... possibly the result of having a union for the labour force. The numbers generally run as a percentage of the wages of the workforce you manage ... when one area is being overpaid it's very difficult to ensure that the rest of the company stays in line. It doesn't happen in the import companies because no one in the company would stand for it. But if you double the workers salary, it's pretty easy to shut them up.

Except in dangerous occupations unions are an outdated concept that only increases the costs to the consumer and hinder the ability of a company to do business. Almost all issues related to exploitation of employees have been address in labour laws, thus negating the need for unions.

But GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers' wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.

The total cost will drop to $62 per hour in 2010 when the linchpin of the contract -- a UAW administered trust fund -- starts paying retiree health care costs.

But that's still $9 more than the $53 per hour that GM estimated Toyota now pays in the U.S., and the gap could be even wider. Toyota spokesman Mike Goss said the company's total labor costs at its older U.S. plants are around $48, with about $30 per hour in wages.

The remaining difference largely is due to "legacy" costs, the cost of a 100-year-old company paying its retiree pensions, Sapienza said.

Everybody stand with the 'Conservatives'!
Lower wages! Less Healthcare! For everyone*!

*except CEOs, investment bankers, oil company executives and of course Senators and Representatives

(edit: fixed typo's)