I have been waiting for Barrons, Business Week, Forbes, and Fortune to clarify the issue – what do the Big 3 carmakers pay their workers and what effect does this have on the overall cost of the car. The New York Times business section claims to have done it. The average is around $56/hour + or minus $5 depending on who is doing the accounting. The key is that $17-20/hour costs due payments to retired workers needs to subtracted out. Much more important is the revelation that automaker’s labor costs are 10% of the total car costs. This is significant and the article raised two other good questions about the American Quality Brand and its lost prowess in manufacturing and service.
First and foremost, a lot of the Obama economic recovery plan is predicated on the US establishing a new green industry manufacturing base. But both the government and business elites in the US have largely sold out on domestic manufacturing. Jobs in America are going to have a broader base than corporate headquarters work – administration, R&D, and other corporate overhead functions(think IT, accounting, HR, etc). Yet by scuttling the car industry which many seem bound and determined to do will eviscerate the manufacturing base, companies and skills in the US. Second, entrepreneurship with its risk capital and mentoring of start-ups has, with the notable exception of IT Venture Capital, been largely abandoned by the Financial Masters of the Universe who have devoted their attention, ever growing bonuses and their investment monies over the past 2 decades increasingly to financial schemes/machinations, IP patent bastions, and raw resource market manipulations. Just look at which industries have seen the top ROE in the US over the past few years and ask why? So knowing what is in $73/hour tells us a lot about the health of US Business and Finance in general.