Monday, December 8, 2008

How can the U.S. auto industry compete with foreign carmakers when the average hourly pay, including fringe benefits, for the Big Three workers is about $74 per hour compared to $48 per hour for the workers manufacturing foreign cars in the United States?

The U.S. auto manufacturers have caved in to the demands of the United Auto Workers when negotiating labor contracts, and the UAW has been very unreasonable in its negotiations with management. The fully funded pensions and health benefits enjoyed by the autoworkers are egregious. Health care and pension costs for the Big Three add about $1,500 to the cost of a vehicle compared to those from foreign competitors. Both current and retired Big Three autoworkers enjoy outlandish health benefits with high health insurance premiums.

Management should sit with the UAW and renegotiate down the pension benefits and have current workers pay 50 percent of the health insurance premiums and retired workers pay 25 percent of the premiums.

The chief executive officers of the Big Three have huge compensation packages. The CEOs of the Big Three should be limited to $250,000 or less in total annual compensation until the bailout loans are repaid and the companies turn around. All executive compensation packages should fall in line under the $250,000 limit for the CEOs. Also, the pay of hourly workers should be reviewed for cost reductions.

Any federal infusion of money into the auto industry should include required changes to the labor contracts and executive compensation. Then the U.S. auto industry might right itself and provide competitive vehicles.


Londonderry, N.H.

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