Addendum on the auto situation

[ginny_t]

Lewenza (head of CAW) says labour costs amount to only 7% of the cost of the car. Granted, the source is not disinterested in the issue; however, why then is all the pressure on the hourly workers to take a cut and save the company. (Anyone else have a "save the cheerleader, save the world" moment there?)

*sigh* Yes, I know, this is what I get for using my logical brain. Fine, back to GinnyLogic™.

Comments

[chickenfeet2003.livejournal.com]

The problem is one has to ask "what is 7% of what"? Both labour cost and total cost could have widely different definitions. If we were to be generous to Lewenza he might mean "total hourly labour costs are only 7% of COGS before overheads" which would be quite low but see below. OTOH he might mean "direct labour costs are only 7% of total costs Incl overhead, depreciation etc" which would be quite a different thing entirely.

So let's be generous and assume the former. We'd then have to ask what the other 93% was and whether there was much GM could do about it. Now, GM sold off all its components businesses years ago so all it does manufacturing wise is assemble. That suggests to me that most of that 93% will be purchased components. GM has already squeezed its suppliers much harder than it has even dreamed of squeezing the UAW. My former employers helped them take several billion per year out of their costs that way. I doubt that there is much left to squeeze there. It's also unlikely that there is much left to squeeze out of real estate or maintenance costs and GM has already laid off thousands of managers and supervisors. That pretty much just leaves labour.

[ginny-t.livejournal.com]

This is why I made sure to cite my source, to point out that it was someone with a stake in the matter. Yeah, math is surprisingly malleable in certain unscrupulous people's hands. *sigh*

I just hate it when the people at the bottom of the org chart are getting what looks like disproportionate pressure to make concessions for the good of the company.

[iampranada.livejournal.com]

I think it has to do with the major pressure on the automaker right now being the possibility of not being able to afford to send out the next round of paychecks. That's been one of the big reasons the governments have been stepping in.