Labor costs in the US auto industry

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Percival P. Cassidy - 28 Feb 2006 21:20 GMT

I heard Gov. Jennifer Granholm of Michigan being interviewed on the
radio this morning. She referred to an engine plant in Dundee, set up
jointly by D-C, Mitsubishi and Hyundai, where labor costs are only 3%.
This is a unionized (UAW) plant.

If labor costs so little, how much is to be saved by having
non-unionized labor, assuming that non-unionized labor does cost less?

Perce

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MoPar Man - 28 Feb 2006 22:54 GMT

> an engine plant in Dundee, set up jointly by D-C, Mitsubishi
> and Hyundai, where labor costs are only 3%. This is a
> unionized (UAW) plant.

"Traditional union rules have been relaxed. Any worker, union or
not, can do any job."

http://www.freep.com/apps/pbcs.dll/article?AID=/20051230/BUSINESS01/512300340

> If labor costs so little,

"At full capacity, the GEMA plants in Dundee will churn out
860,000 engines a year with a workforce of about 500 people,
about a quarter the number of workers needed by some existing
engine plants. Hourly wages range from $21 to $30."

"The GEMA plant draws mixed reaction from workers at the older
plants in metro Detroit. Some resent that jobs go to Dundee as
their own plants get smaller. But the plant shows a contrast
between the new and old. The floors and machines are sparkling
clean, and for an auto plant it's amazingly well lit."

"This is not your father's plant," said Daisy Red, 38, the
manager of business planning for the Dundee plant and future
GEMA global business. She has spent 10 years in the auto
industry. The differences are more than superficial. The
Dundee plant is highly automated with an educated workforce
and a team approach to manufacturing."

"Dundee is a UAW plant, but the union agreed to different
terms, such as a single class of employee. Traditional plants
have several classifications that dictate what jobs union
workers can perform. The Dundee rules give the plant more
flexibility in assigning work. Anyone, including an office
worker, is capable of working the line. Every employee must
have a two-year degree, trade certification or five years
experience in advanced computer machining."

> how much is to be saved by having non-unionized labor,
> assuming that non-unionized labor does cost less?

Automation, advanced employee education requirements, and flexible
work assignments (relaxed union work terms) is what makes this plant
different.

See also:

http://www.findarticles.com/p/articles/mi_m3165/is_3_39/ai_99101962

http://car-reviews.automobile.com/news/daimlerchrysler-hyundai-and-mitsubishi-re
port-second-jv-engine-plant-coming/318/

http://www.wzzm13.com/news/news_article.aspx?storyid=50350

http://www.mlive.com/news/statewide/peter_luke/index.ssf?/base/news-0/1137712205
296760.xml&coll=1

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