GM to save most from pact
GM to save most from pact
January 13, 2008
And the winner of the 2007 UAW negotiations is … General Motors Corp.
Not that the union lost out, but GM will reap savings from the contract faster than Ford Motor Co. or Chrysler LLC will, labor economist Sean McAlinden, from the Center for Automotive Research, told journalists Saturday on the eve of the Detroit auto show.
By 2011, he said, GM may even cut its U.S. hourly labor costs below those of archrival Toyota Motor Corp.
"General Motors may have not only eliminated its labor cost gap with Toyota Motor Corp. in North America," McAlinden said. "It may actually be at an advantage" by 2011.
The contract will cut GM’s labor cost per vehicle in North America by about $1,382 by 2011, McAlinden said.
The big savers: a retiree health-care trust that relieves the automaker of $88 billion in health cost liability and an older workforce that can more quickly be replaced with lower-paid workers.
McAlinden said GM is expected to replace nearly 40% of its 72,280 hourly workforce by 2011. That will reduce its labor costs from $62 per hour for top-tier workers to about $26 per hour for 20,000 workers and $47 per hour for about 9,000 workers.
"They won’t be any more expensive than $47 an hour, McAlinden said. "Why is $47 important? That is the Toyota-estimated, all-in labor cost in the United States."
By 2011, McAlinden estimates, only 9.7% of Ford workers and 13.4% of Chrysler workers will be second-tier workers.
The contract, McAlinden said "eliminates the gap almost to the dollar, we estimated" GM "had with Toyota North America in 2006
