DETROIT — The leaders of General Motors and the United Auto Workers union told Congress this week that a new union contract will virtually erase the labor-cost gap between GM and foreign competitors with U.S. factories. That’s not quite true, according to GM’s own figures.
Although the contract signed last year eliminates about two-thirds of the cost gap when its provisions take full effect in 2010, GM’s labor costs will remain about $9 per hour, or 17 percent, higher than Toyota’s, according to GM estimates.
Figuring out labor costs is tremendously complicated because the contract has many provisions that change based on U.S. auto sales and production rates. Also, GM is estimating costs for the Japanese automakers.
But GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers’ average wage of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.
The total cost will drop to $62 per hour in 2010 when the linchpin of the contract — a UAW administered trust fund — starts paying retiree health care costs.
But that’s still $9 more than the $53 per hour that GM estimated Toyota now pays in the U.S.
