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The other shovel that helped dig the domestics' hole
Filed under: Japan, Plants/Manufacturing, Ford, Earnings/Financials
So how exactly can a company with the heritage and scope of Ford Motor Company manage to lose $12.7 billion in one year? Or, for that matter, how could GM lose $10.6 billion last year? All while Toyota continues to soldier on, racking up profits and closing in on number one. Well, it's more involved than most people realize. Sure we can gripe about product and quality all day long, but as CNN tells us, there's a lot more to it than that. Using a report by the Detroit consulting firm of Harbour-Felax, they paint a pretty bleak picture for the domestics. Some of the numbers in the findings are staggering.
Domestics trail the Japanese by $2900 in per vehicle profit. The main reason there's such disparity is labor costs. Sure we've been hearing that line for a while, but check out the data supporting it. Health care alone accounts for $1,635 per vehicle for GM. That's how much they spend on every active AND retired worker. Toyota on the other hand doesn't have many retired workers, doesn't spend a dime on them, and only pays about $215 for health care for active workers. Add to that the $630 per vehicle GM spends on other union related costs like work rules, line relief and holiday pay, plus the $350 per vehicle pay UAW workers get for not working when plants are shut, and you start to see where part of the problem lies.
We highly recommend reading the whole fascinating story on the other side of the read link.
Thanks for the tip, Stedwoo!
[Source: CNN Money]
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BOLD MOVES: THE FUTURE OF FORD A new documentary series. Be part of the transformation as it happens in real-time
More...
So how exactly can a company with the heritage and scope of Ford Motor Company manage to lose $12.7 billion in one year? Or, for that matter, how could GM lose $10.6 billion last year? All while Toyota continues to soldier on, racking up profits and closing in on number one. Well, it's more involved than most people realize. Sure we can gripe about product and quality all day long, but as CNN tells us, there's a lot more to it than that. Using a report by the Detroit consulting firm of Harbour-Felax, they paint a pretty bleak picture for the domestics. Some of the numbers in the findings are staggering. Domestics trail the Japanese by $2900 in per vehicle profit. The main reason there's such disparity is labor costs. Sure we've been hearing that line for a while, but check out the data supporting it. Health care alone accounts for $1,635 per vehicle for GM. That's how much they spend on every active AND retired worker. Toyota on the other hand doesn't have many retired workers, doesn't spend a dime on them, and only pays about $215 for health care for active workers. Add to that the $630 per vehicle GM spends on other union related costs like work rules, line relief and holiday pay, plus the $350 per vehicle pay UAW workers get for not working when plants are shut, and you start to see where part of the problem lies.
We highly recommend reading the whole fascinating story on the other side of the read link.
Thanks for the tip, Stedwoo!
[Source: CNN Money]
Read | Permalink | Email this | Comments
BOLD MOVES: THE FUTURE OF FORD A new documentary series. Be part of the transformation as it happens in real-time
More...