UAW On Strike

[Creedmoor]

What the heck dose the price of a finished product have to do with what a worker makes? Labor has a market value that is irrelevant to the market value of the finished product…

Irrelevant? Its one of the fixed entity's the manufacturer has with building a product.

 

[foszoe]

Irrelevant? Its one of the fixed entity's the manufacturer has with building a product.

The value of labor is different then cost. For example, I used to work in Columbus Ohio. The company paid a great salary for the area and they knew it. They also started losing labor because they did not see a need to compete nationally only locally. So I left. Now I have more ties locally. So although the value of my labor may be higher, I am not willing to move. Well I would but the pay would have to go up substantially.

 

[xwing]

NO it wasn't sarcasm.
I responded to someone complaining about parts price increases. He actually kind of blamed Biden but I was trying to make a point that prices have went up anyway and that UAW workers don't have any say on prices and when they buy autos or parts they pay more as everyone else does.

Prices go up anyway. But they will go up much more with a hefty union contract raise. When the price of labor goes way up, the price of the finished good goes way up as well. (Either that, or the company just goes out of business.) Just like in everything else, the cost increases are passed on to the consumer.

 

[JCSR]

When I worked in the paper industry the cost per ton was directly related to labor costs. Everything from energy prices to down time to raw materials effected the per ton cost. Not sure how the auto industry is different.

 

[foszoe]

Prices go up anyway. But they will go up much more with a hefty union contract raise. When the price of labor goes way up, the price of the finished good goes way up as well. (Either that, or the company just goes out of business.) Just like in everything else, the cost increases are passed on to the consumer.

Like Mike said value is different than cost.

If the union strikes and believes their value is higher than the company. It's on the company to decide the value of all the things that go into training another workforce moving vs a new contract.

A contract is more about determining the value of labor. Once signed it determines the cost of labor.

 

[Ingomike]

When I worked in the paper industry the cost per ton was directly related to labor costs. Everything from energy prices to down time to raw materials effected the per ton cost. Not sure how the auto industry is different.

Labor is a cost of production. The product is worth what the market says it is. Labor is worth what the market says it is. Management is producing a product with market labor rates that the product can be sold at the market rate while making a profit…

 

[Creedmoor]

The value of labor is different then cost. For example, I used to work in Columbus Ohio. The company paid a great salary for the area and they knew it. They also started losing labor because they did not see a need to compete nationally only locally. So I left. Now I have more ties locally. So although the value of my labor may be higher, I am not willing to move. Well I would but the pay would have to go up substantially.

Yes, I understand. All I was saying is that labor in manufacturing is a know cost.
More so with 4 year labor contracts.

Cafe Valley Bakery in Marion a few years ago paid the factory folks about 12 bucks an hour, the turnover was Fing Huge with them. The thought with them was we just need to pay more to the hourly employees to help cure this problem.
They kicked up another 5 bucks an hour. Wanna guess what it fixed with the unskilled labor?
Nothing, Nothing at all. Lessons are hard.


I moved twice with my working years to stay with the employment I was doing.
I moved to Indiana and it cost me 50 cents an hour, where I was ahead was I sold a house that had a mortgage and paid cash for a home here. And I bought a farm here before I had to pay Capitol Gains.
Second move it cost me money, lots of money.

 

[JCSR]

Labor is a cost of production. The product is worth what the market says it is. Labor is worth what the market says it is. Management is producing a product with market labor rates that the product can be sold at the market rate while making a profit…

So are you saying the company paying more for labor will not effect the MSRP of the vehicle? The company will just absorb the extra cost because they are good guys?
I don't see that happening.

 

[Ingomike]

So are you saying the company paying more for labor will not effect the MSRP of the vehicle? The company will just absorb the extra cost because they are good guys?
I don't see that happening.

I am saying exactly what I said. Labor has a market rate. The product has a market rate. If the market rate for labor is too high, the cost of production may exceed the products market value. If the market rate of labor is low and the market rate for the product high then profits are made. But the market rate of the product is irrelevant to the market rate of labor. No one cares what the manufacturers labor cost are to build a vehicle, only the price of the vehicle in the market

 

[Rookie]

Prices go up anyway. But they will go up much more with a hefty union contract raise. When the price of labor goes way up, the price of the finished good goes way up as well. (Either that, or the company just goes out of business.) Just like in everything else, the cost increases are passed on to the consumer.

The last four years, we got a 6% raise, but the price of cars went up 30%+.

 

[Creedmoor]

When I worked in the paper industry the cost per ton was directly related to labor costs. Everything from energy prices to down time to raw materials effected the per ton cost. Not sure how the auto industry is different.

I'm a dumba$$ but, A few members should start a small manufacturing business.

 

[Creedmoor]

The last four years, we got a 6% raise, but the price of cars went up 30%+.

You my friend just don't understand math, did your mom not spend time using flash cards with you?
Math is hard.

 

[JCSR]

The last four years, we got a 6% raise, but the price of cars went up 30%+.

' But the market rate of the product is irrelevant to the market rate of labor.'

 

[firecadet613]

Labor is a line item on the P&L, it needs to be managed. If labor costs go way up, so will the product cost...

 

[foszoe]

Labor is a line item on the P&L, it needs to be managed. If labor costs go way up, so will the product cost...

Maybe. Generally

The underlying assumption: all other cost remain equal, they could go down through efficiency gains.

The company does not absorb 100% of the cost increase.

 

[KLB]

Maybe. Generally

The underlying assumption: all other cost remain equal, they could go down through efficiency gains.

The company does not absorb 100% of the cost increase.

Now you are reaching. If labor costs X today and x+5% tomorrow, then the cost of producing the product will go up. Any other changes are separate, unless they are specifically tied to the increase in labor cost.

I'm not really sure what you guys are even arguing about. No one said labor is the only reason prices go up. Any increase in costs for producing an item will increase the overall cost. Inflation has been crazy. Everything has been going up.

Not to mention the lack of supply we had to meet the demand drive prices higher as well. Especially by dealers.

 

[foszoe]

Now you are reaching. If labor costs X today and x+5% tomorrow, then the cost of producing the product will go up. Any other changes are separate, unless they are specifically tied to the increase in labor cost.

I'm not really sure what you guys are even arguing about. No one said labor is the only reason prices go up. Any increase in costs for producing an item will increase the overall cost. Inflation has been crazy. Everything has been going up.

Not to mention the lack of supply we had to meet the demand drive prices higher as well. Especially by dealers.

If labor is 5% of the cost today and the labor cost goes up 50%, with all other costs remaining the same, what is a reasonable expectation for the product cost increase, in %?

The claim is the labor cost will price the BIG 3 out of the market.

A secondary claim is the perceived value of the Big 3 will go down because people can't get their cars fixed due to price shortages.

 

[KLB]

If labor is 5% of the cost today and the labor cost goes up 50%, with all other costs remaining the same, what is a reasonable expectation for the product cost increase, in %?

The claim is the labor cost will price the BIG 3 out of the market.

A secondary claim is the perceived value of the Big 3 will go down because people can't get their cars fixed due to price shortages.

2.5%

 

[Ingomike]

' But the market rate of the product is irrelevant to the market rate of labor.'

I don’t get what you do not understand about that quote. If the market value of widgets is $10 and all the companies selling widgets sell them at $10, that is the market value of the widgets. If one companies labor costs go up $5 per widget, that has no affect that changes the market value of widgets, the market is still $10, the company with the $5 labor increase will just go bankrupt…

 

[Ingomike]

Labor is a line item on the P&L, it needs to be managed. If labor costs go way up, so will the product cost...

Which may be more than the market value of the product…