Labour Costs and the Auto Bailouts

One of the central issues that materialize when people talk about the bailouts for the auto industry is the high cost of labour.  Apparently, the Big 3 pay the average worker $73 per hour, but we should all know this is only kind of true.

(Of course, when brokerages, banks and insurance companies are bailed out, no one asks why certain traders and executives continue to get billion-dollar bonuses, but I suppose that’s another issue.)

The folks at the New York Times tried and failed to investigatethe true cost of labour with Ford/GM/Chrysler, mainly because they miss one major component:  the cost of labour for the Big 3 represents about 10% of total costs .  The majority of costs are actually materials.  Plastics, metals, ceramics and other inputs drove costs through the roof in 2008, but in 2009 it’s likely that these costs will drop to the benefit of the manufacturers.

I’d still like to see a more honest breakdown of all of the costs, including management, materials, labour, energy costs, marketing, warranty coverage, distribution costs and other expenses related to the sale of a car in North America.  Only when we’ve got all of the facts on the table will we be able to make prudent decisions about the future of this industry.

(P.S.  If you’ve got these kind of numbers, please share them with the comments below.  I’m sure I’m not alone in wanting to see what these costs are like).

Meanwhile, the Socialist Project offers a much broader analysis of the efforts involved with the auto bailouts to break the spine of the labour unions in North America (link here . It’s long, but worth the read) .  It’s no wonder that the bailouts are nothing like they should be (ie. protection for pensions, protection of warranties), given that the real agenda is to reduce the cost of labour in this continent.