Texas is a big business battlefield in the automobile wars, and this excellent Lee Hawkins Jr. – Norihiko Shirouzu/WSJ ($) article reviews the competive advantages that Toyota Motor Corp. enjoys in building trucks in its new San Antonio manufacturing facility over General Motors Corp’s reliance on its 50 year-old Arlington manufacturing facility. Not only does Toyota enjoy the advantages of newer equipment and more expansion room at its facility in comparison to the landlocked GM plant, a brief review of the cost structure of the two plants speaks volumes about GM’s current problems:
Two decades ago, GM factories suffered from a sizable gap compared with similar Toyota factories, as measured in the number of hours it takes workers to build a vehicle. Recent Harbour surveys show that this gap has narrowed substantially. But GM’s productivity gains are offset by higher hourly labor costs and the burden it carries for benefits owed to retirees.
In Arlington, GM pays union-scale wages of $26.50 to $30.50 an hour to its 2,800 hourly workers there. On average, GM pays $81.18 an hour in wages and benefits to U.S. hourly workers, including pension and retiree medical costs. At that rate, labor costs per vehicle at Arlington are about $1,800, based on the Harbour Consulting estimate of labor hours per vehicle.
In San Antonio, Toyota will use non-union labor and will start its 1,600 hourly workers at $15.50 to $20.33 per hour, which will grow after three years to $21 to $25. Harbour Consulting President Ron Harbour estimates Toyota’s total hourly U.S. labor costs, with benefits, at about $35 an hour — less than half of GM’s rates. The brand-new plant won’t have any direct retiree costs for many years. So if the San Antonio factory does no better than match the Arlington plant in productivity, it could still enjoy a labor cost advantage of about $1,000 per vehicle, a substantial sum in industry terms. That’s money Toyota could translate into extra standard features — such as stability control — that could make its trucks more appealing.
Read the entire article. Despite GM’s troubles, the company can still produce a pretty slick commercial.
Out of 5 boys in my family, 4 now drive Toyota pickups. No one tried to get the others to buy. It just happened. That is how big a gap GM has in credibility. My younger brother bought his because he never sees Toyotas in his mechanic shop. GM vehicles keep him in business.
And commercials? Go watch the Toyota Tacoma ads and get back to me. Can GM say their trucks are meteor proof? 😉
I bought my first Toyota truck in 1987 and have had four more since. Never had any problems. The American motor co’s have been building junk for far too many years.