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Saturday, April 18, 2009

Reality check, please, folks

The Canadian public—through its elected representatives in Ottawa—seem to have drawn a line in the sand regarding the North American auto industry. There is a limit to their largess in the form of bailout money. To get more, both GM and Chrysler  must show they have a viable business model going forward.

This all seems reasonable to me, but then I’m instinctively against corporate welfare—it breeds inefficiencies when what we need are lean, highly competitive industries that are capable of holding their own on the world stage. On the other hand, I do concede the unusual economic situation in which we suddenly find ourselves, and I have not minded too much the first “bailout” package given to GM and Chrysler even though I fear that we’ll never again see a penny of that money.

The ball is now in the union’s court. Canadians, who earn only a fraction of what the auto workers have been paid for decades, are seeing their hard earned tax dollars going to prop up failing businesses and to keep overpaid workers on the assembly line. The party is over—the juice has been all squeezed from the auto industry lemon.

“Tony Faria, co-director of the automotive research centre at the University of Windsor, estimates the average all-in labour cost for Japanese-run assembly plants in Canada is $47 an hour—compared with $76.14 an hour that Chrysler says it pays in terms of wages, benefits and retiree costs.”

[Source]

The message to the union is clear: accept similar pay to the already highly paid Toyota workers or take your chances in bankruptcy court. Toyota workers earn an estimated $47 and hour or about $94,000 a year—about five times more than the minimum wage.

I have no sympathy for those who perform relatively unskilled work and expect to be paid on a scale many university- and college-trained workers such a Registered Nurses, childcare workers, accountants, lawyers and engineers—and even school teachers—would jump at. Chrysler workers are paid at a level beyond what can be afforded by their or virtually any other manufacturing industry.

Time for a reality check, folks.

3 comments — This is a moderated blog and comments will appear when approved. Please don’t resubmit if your comment doesn’t appear immediately, and please do not post material that is obscene, harassing, defamatory, or otherwise objectionable.

  1. Toyota and Honda workers are paid roughly $31 an hour. With benefits and pension costs factored in the total average cost is about $53 an hour. That's Honda anyway, I imagine toyota is pretty much the same.

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  2. When govenment picks "winners and losers" the taxpayer is always the loser. Both federal and provincial governments have financially assisted the auto industry - it didn't work - move on. Its time for bankruptcy and reorganize or wind down these car companies.

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