SNIP
>>Edward is right. Entitlement payments to retired workers explain much of the cost gap between American and foreign automakers. The huge number that was floating around about average earnings per American autoworker ($80/hour? -- something like that) included the dollar value of retiree benefits, spread over the number of active workers. When you eliminate that the gap becomes $10/hour or less.
>
>Uh... that does not answer my question. In europe car manufacturers also need to pay for retirements and healthcare. Also any forreign car manufacturer in the US would suffer from the same problem, wouldn't it? My question is why is this so different for US car manufacturers compared to european? After all we europeans have long been critisized to be too social and therefor too expensive :)

PMJI,

First, a large portion of the medical benefits for retirees is paid from taxes in Europe so it is a shared cost and not carried entirely by the manufacturer like it is here.

Second, the job-bank is a social program where the cost is carried entirely by the company as well. It is for anyone laid-off or unable to work for any reason and provides the worker with 90% of his pay.

Third, some studies showed it takes about 30 hours to produce a vehicle at a cost of $1000 for Toyota, and 35-45 hours to build a vehicle here at a cost of $1500-2000. The whole process needs to be revamped for efficiency here.

Fourth, look at the salary of the management. Start witht he CEO. The CEO of Toyota makes around $1mil while the CEO of Ford takes in $28mil/yr.

Fifth, new workers (janitors even) start out at $28/hr. The average 'seasoned' worker earns $51/hr. Toyota's U.S. workers cost about $47.25 an hour, which includes $31.50 in actual pay and $15.75 in benefits.

The list could go on and on....

Here is a site which looked at the new salary plan which is an improvement over the old practices, but keep in mind that it only applies to new employees:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDsw8mVBN.R8&refer=home

A snippet:

The lower-paid jobs, along with a shift of $50 billion in health-care obligations to the union fund, would help GM Chief Executive Officer Rick Wagoner narrow an estimated $25- to $30- an-hour cost gap with Toyota Motor Corp.'s U.S. factory workers. GM pressed the UAW for concessions after $12.4 billion in losses for 2005 and 2006.

And that was in 2007!!!

In essence, the social programs the employees and ex-employees of the automakers here are provided and paid for by the company and the current employees. The cost is not shared by all tax-payers. The company bears the entire cost. Then, add in the poor management, lack of efficiency, and the high management salaries...