Auto Industry Bailout

For obvious reasons, the Auto Industry Bailout continues to be at the top of the list.

I read an interesting statistic this morning. The average labour cost of a vehicle is $1,500. If that figure is even close to accurate, gaining concessions from current workers is not going to help much.

Likewise, getting executives to lower their astronomical pay scales would be mainly a symbolic gesture. It would not lower the cost of the car by much.

I also understand that a big issue for GM especially is the fact that they have a HUGE retired group that continues to cost them big bucks. I have not seen how much this impacts the cost of a GM car, but understand it is at least another $1,000.

Finally, I would like to share this quote from

“A final note on all this: Labor costs only account for about 10 percent of the cost of producing a vehicle. And it’s not the cost of American cars that people complain about; they’re already often thousands of dollars less than their Japanese counterparts. Whatever changes may be made in the carmakers’ labor agreements, we’re convinced, and the recent hearings show, that there are much bigger problems in Detroit.”