Think you have problems on the Talent cost structure front?
Let's keep it in perspective. You have concerns. Ford and the other auto makers have problems.
The US auto industry was in DC this week, begging for a bail out. That got me wondering what the total talent cost structure was for Detroit automakers. Here's a clip from the AP I found:
"Detroit News columnist Daniel Howes, citing people familiar with Ford's bargaining strategy, reported earlier Wednesday that Ford would seek to cut hourly labor costs by 30 percent, from about $71 to around $50, including wages, pension and health care.
The costs then would be comparable to those of Asian automakers ($42 per hour), who pay similar wages but have far lower pension and health care costs, and make thousands of dollars more per vehicle than the Detroit automakers do."
For those of you scoring at home, that's an annualized total comp cost of around $148,000 per FTE, vs. a reported average of $85,000 for the foreign automakers. All I can say to that is "Wow"…
Unfortuantely, that $70 per worker number is a bit misleading. Because of thew structure of the union contracts, Ford, GM, and Chrysler are stuck paying medical benefits for some of their retired employees. These costs are included in the numerator of the $70 per employee calculation. What this means is that by hiring more workers at the average wage, these companies can actually lower the $70 per worker number. (They essentially are spreading the retired worker benefit costs over a greater number of workers.)
This is not to say that the problems facing Ford et al. are not real. They indeed are. But simply paying their existing employees the same wages+ as comparable employees at Toyota, Honda, etc. will not completely eliminate this gap. The payments to the retired workers remain on the books of Ford et al., courtesy the UAW.
Still, though, wow.