Desperate Detroit-based automakers are moving to lessen the labor cost roughly by $25-an-hour and are trying to cut it down to the level paid by Asian rivals Toyota Motor Corp. and Honda Motor Co.
Battling with the increasing losses, automakers are estimated to pay about 30 percent more per hour in wage, pension and health care costs than the Toyota and Honda motors.
All three major Detroit car companies are losing their ground to rival Asian automakers. Mounting loses has forced American carmakers to reduce their expenses. Three notable automakers have introduced their reconstructive plan, in which they are laying off thousands of workforce and locking up the loss making units as well.
As per a recent annual report, General Motor, which reigned world auto market for long 76 year continuously and recently lost its acme position to Toyota, is paying for its labor on an average $73.26 per hour, whereas luxury carmaker Chrysler is giving $75.86 per hour.
Ford emerged as a major loss making company in the recent times as it lost around $12.7 billion last year and has mortgaged its assets to fund a turnaround plan that includes thousands of job cuts to shrink itself to match lower demand for its products. Ford is paying approximately $70.51 per hour in wages and benefits to its hourly workers last year.
All American auto giants are trying to persuade its labor for new contracts and are preparing action plan to discuss in the upcoming contract meeting between the U.S.-based automakers and the United Auto Workers (UAW) next month.
Automakers are seeking to reduce labor cost to around $48 per hour, about the average hourly cost incurred by Asian auto giants. The costs then would be akin to Asian automakers, which pay similar wages but have far lower pension and health care costs and make thousands of dollars more per vehicle than the three Detroit automakers.
It is uncertain that what will be the outcome of the meeting, but industry analysts asserted that the proposed implementations are necessary for Ford for its survival, as there seems no way out or be history.
After the news spread in the market, automakers shares respond fairly on the repercussion, as GM shares rose 67 cents to close at $32.10, while Ford gained 24 cents to $8.56 and DaimlerChrysler’s U.S. shares mounted $1.74 to $89.58.
Image: msn
Via: Washingtonpost
