Big 3 to Honda / Toyota Car Maker Comparison

[GTKeeper]

http://bigthreeauto.procon.org

So we all know how much more UAW workers cost than Toyota / Honda workers etc. There is a site that does a nice comparison of costs between the Big 3 to their Toyota / Honda counterparts.

The cost difference per employee is big. The legacy costs are big. What I find interesting though is that Rick Wagoner and Allan Mulally made SUBSTANTIALLY more money than the top 26 executives of Honda combined!!!

I would love to see the break down in comp for mid level / upper level management at the Big 3 compared to Honda / Toyota. Seems to me that the Americans like to pay themselves hefty sums.

Rick made 16 x the Salary of the Toyota CEO in 2007
Allan made 24 x the Salary of the Toyota CEO in 2007

Are our managers / execs doing 16 x or 24 x better job than the Toyota CEO?

Before we get to UAW bashing or pure management bashing, I think everyone should agree that major costs cuts across the board are needed. Compensation is one of the quickest items to reduce. For UAW it would take a contract rework but I think we could start with the white collar / non union jobs right now, today.

 

[Vette73]

AGAIN!!! the current new worker at a GM/Ford plant will make the same, maybe even less, then a new worker at a Nissan, toyota, etc.. plant. So how much more do they need to cut the bottom workers pay?

Heck after the UAW gave cuts to its workers for GM, GM turned around and said thanks and paid its CEO more that year. Talk about a slap in the face.

 

[Schadenfroh]

Did the execs at Toyota get more / better stock options than the GM / Ford execs? The GM / Ford execs might have prefered cash over more stock.

 

[GTKeeper]

Originally posted by: Schadenfroh
Did the execs at Toyota get more / better stock options than the GM / Ford execs? The GM / Ford execs might have prefered cash over more stock.

I don't know, but its crazy that the Toyota CEO makes 1/24th of what the Ford CEO makes. And Toyota is totally kicking Ford's butt!

 

[GroundedSailor]

Originally posted by: GTKeeper
So we all know how much more UAW workers cost than Toyota / Honda workers etc. There is a site that does a nice comparison of costs between the Big 3 to their Toyota / Honda counterparts.

The cost difference per employee is big. The legacy costs are big. What I find interesting though is that Rick Wagoner and Allan Mulally made SUBSTANTIALLY more money than the top 26 executives of Honda combined!!!

I would love to see the break down in comp for mid level / upper level management at the Big 3 compared to Honda / Toyota. Seems to me that the Americans like to pay themselves hefty sums.

Rick made 16 x the Salary of the Toyota CEO in 2007
Allan made 24 x the Salary of the Toyota CEO in 2007

Are our managers / execs doing 16 x or 24 x better job than the Toyota CEO?

Before we get to UAW bashing or pure management bashing, I think everyone should agree that major costs cuts across the board are needed. Compensation is one of the quickest items to reduce. For UAW it would take a contract rework but I think we could start with the white collar / non union jobs right now, today.

Got a link to the site?

 

[Atrail]

www.procon.org

But it is getting hammered.

 

[Dari]

American CEOs are big fans of Tournament Theory. Edward Lazear, George Bush's chairman of Council of Economic Advisors, came up with the theory in 1981. It advocated a convex relationship between rank in a company and pay. However, this theory has been repeatedly debunked outside of America (and I also debunked it when I was an undergrad when I added sabotage to the competition).

 

[GTKeeper]

Originally posted by: Dari
American CEOs are big fans of Tournament Theory. Edward Lazear, George Bush's chairman of Council of Economic Advisors, came up with the theory in 1981. It advocated a convex relationship between rank in a company and pay. However, this theory has been repeatedly debunked outside of America (and I also debunked it when I was an undergrad when I added sabotage to the competition).

I never bought the notion for a second that we need to pay CEOs 100-200x the entry level salary because otherwise well qualified people 'would never take the job'. B S!

I started at a start-up as employee #9, my CEOs pay was 150% of mine. As we have grown the owners of the company have paid themselves more but not 100-200x entry level pay! More like 4-5x.

 

[Mursilis]

Originally posted by: GTKeeper

Originally posted by: Dari
American CEOs are big fans of Tournament Theory. Edward Lazear, George Bush's chairman of Council of Economic Advisors, came up with the theory in 1981. It advocated a convex relationship between rank in a company and pay. However, this theory has been repeatedly debunked outside of America (and I also debunked it when I was an undergrad when I added sabotage to the competition).

I never bought the notion for a second that we need to pay CEOs 100-200x the entry level salary because otherwise well qualified people 'would never take the job'. B S!

And after taking a look at the sort of results these companies have gotten from overpaid management, maybe they'd be better off just having selected random dummies from the phone book. I'd like to make the following offer to all Fortune 500 companies - I will drive your company into the ground at a 50% savings on the going rate for CEOs. Please send your corporate jets, and I'm available for onsite interviews.

In truth, most corporate boards are comprised of other CEOs and top managers, so of course they're going to vote for escalating CEO pay, in the hopes it will create upward pressure in the pay market generally. Self interest in one of its purest forms.

 

[ElFenix]

this isn't a detroit vs toyota thing, this is a US CEO vs. rest of the world CEO thing. of course, now the rest of the world CEOs are starting to demand pay comparable to US CEOs.

the real reason behind it is that delaware courts don't recognize putting your buddies on your board and having your buddies put you on their board as a conflict of interest/self dealing/whatever. put your estranged sister on the board and she's interested, put your best friend and college roommate on your board and they're uninterested.

 

[StageLeft]

For some dumb reason I, and others, rarely have mentioned exec pay, so a good topic!

 

[Onita]

Originally posted by: Skoorb
For some dumb reason I, and others, rarely have mentioned exec pay, so a good topic!

Not really. As was already mentioned, its not really a comparison of the Big Three vs. Toyota/Honda, but more of a comparison of US CEO's vs world CEO's. US CEO's, for whatever reason, make substantially more than the rest of the world.

 

[HomerJS]

Originally posted by: GTKeeper
http://bigthreeauto.procon.org

So we all know how much more UAW workers cost than Toyota / Honda workers etc. There is a site that does a nice comparison of costs between the Big 3 to their Toyota / Honda counterparts.

The cost difference per employee is big. The legacy costs are big. What I find interesting though is that Rick Wagoner and Allan Mulally made SUBSTANTIALLY more money than the top 26 executives of Honda combined!!!

I would love to see the break down in comp for mid level / upper level management at the Big 3 compared to Honda / Toyota. Seems to me that the Americans like to pay themselves hefty sums.

Rick made 16 x the Salary of the Toyota CEO in 2007
Allan made 24 x the Salary of the Toyota CEO in 2007

Are our managers / execs doing 16 x or 24 x better job than the Toyota CEO?

Before we get to UAW bashing or pure management bashing, I think everyone should agree that major costs cuts across the board are needed. Compensation is one of the quickest items to reduce. For UAW it would take a contract rework but I think we could start with the white collar / non union jobs right now, today.

Everyone talks about legacy costs. Remember since Toyota and Honda plants haven't been here long they don't have the huge retirement base like GM.

 

[GTKeeper]

Originally posted by: Skoorb
For some dumb reason I, and others, rarely have mentioned exec pay, so a good topic!

What I am wondering is how much of a concession did Management make when UAW announced major reductions in costs etc. that are starting in 2010.

I want things to be fair in the end and I feel like we are always separating things into 2 camps. 1 camp is UAW rocks and its all management's fault, the other camp is management is less at fault than the workers.

Since management is in control of the company I doubt we would ever see a report from the big three with the following.

For each car produced, what is the % of each car that goes into

UAW compensation
Middle Management Compensation
Upper Management Compensation


Fixed Costs
Material Costs
Shipping Costs

Dealer Incentive Costs
Dealer Rebate Costs ....

 

[CLite]

Originally posted by: HomerJS
Everyone talks about legacy costs. Remember since Toyota and Honda plants haven't been here long they don't have the huge retirement base like GM.

EXACTLY. People so crassly say cut legacy costs and point to Honda / Toyota. What folks don't realize is they are damning hundreds of thousands of retired people. The key difference is not the excessiveness of the retirement package but the relative age of the Big 3 vs. Honda/Toyota in the US. The big 3 have a huge retired popular while the foreign companies do not.

Now regarding the OP and CEO compensation I do believe in general US upper management is disproportionally rewarded compared to their performance. If a CEO was trailblazing and created enormous revenue gains and increased profit margins sure pay him top of the line. However, these CEO's and those on wallstreet have failed their stockholers but are still being paid bank.

 

[Suspicious-Teach8788]

Originally posted by: CLite

Originally posted by: HomerJS
Everyone talks about legacy costs. Remember since Toyota and Honda plants haven't been here long they don't have the huge retirement base like GM.

EXACTLY. People so crassly say cut legacy costs and point to Honda / Toyota. What folks don't realize is they are damning hundreds of thousands of retired people. The key difference is not the excessiveness of the retirement package but the relative age of the Big 3 vs. Honda/Toyota in the US. The big 3 have a huge retired popular while the foreign companies do not.

Now regarding the OP and CEO compensation I do believe in general US upper management is disproportionally rewarded compared to their performance. If a CEO was trailblazing and created enormous revenue gains and increased profit margins sure pay him top of the line. However, these CEO's and those on wallstreet have failed their stockholers but are still being paid bank.

And companies like IBM have been around for a long time. There are other great US companies that are around and we don't have these issues. How much costs do Intel, Microsoft, HP, IBM, etc carry around regarding retirees? It's probably nothing compared to what GM has to deal with.

 

[GTKeeper]

Originally posted by: DLeRium

Originally posted by: CLite

Originally posted by: HomerJS
Everyone talks about legacy costs. Remember since Toyota and Honda plants haven't been here long they don't have the huge retirement base like GM.

EXACTLY. People so crassly say cut legacy costs and point to Honda / Toyota. What folks don't realize is they are damning hundreds of thousands of retired people. The key difference is not the excessiveness of the retirement package but the relative age of the Big 3 vs. Honda/Toyota in the US. The big 3 have a huge retired popular while the foreign companies do not.

Now regarding the OP and CEO compensation I do believe in general US upper management is disproportionally rewarded compared to their performance. If a CEO was trailblazing and created enormous revenue gains and increased profit margins sure pay him top of the line. However, these CEO's and those on wallstreet have failed their stockholers but are still being paid bank.

And companies like IBM have been around for a long time. There are other great US companies that are around and we don't have these issues. How much costs do Intel, Microsoft, HP, IBM, etc carry around regarding retirees? It's probably nothing compared to what GM has to deal with.

That is true, but at the same time you don't see MSFT HP or IBM workers getting together and creating a union or having the need to do so.

If I personally had my way I would scrap the whole system. I mean seriously fire every single person in GM Ford and Chrysler and start over. Its time to re-factor the whole thing.

What I think is that the cost blame can go for both UAW and Management. HOWEVER the buck stops with Management. If Management thought that the UAW was the sole reason that the company is tanking, they should have let the strike. Yea, it would be billions of losses, but we are seeing billions of losses now. Why? Because of crappy products, crappy union contracts, crappy everything. The reason unions have power is because of the ability to strike.

I worked for a client as a consultant that was a union shop. I saw first hand how a 'union' functions and frankly I don't like it. The whole us vs them mentality (management vs union) is sickening and there needs to be a brand new starting point. If you want some examples I can provide them.

I absolutely do not want these companies to get any bailout money.

 

[MovingTarget]

Using MSFT as a comparison to the US auto industry with regards to legacy costs is laughable at best. How long has MSFT been around? Not near as long as the big 3. They also don't employ near as many workers. Unions may be inconsequential compared to those issues in the comparison. Besides, would MSFT even need as many blue vs. white collar workers in the first place simply due to the nature of their industry/product? I think not. A more valid comparison for the auto industry would be any other heavy industry, which IBM, HP, etc. aren't near as involved in. A comparison to say, the steel or chemical industry would probably be enlightening when it comes to the issue of unions, executive compensation, and legacy costs.

 

[GroundedSailor]

What is missing in the comparison is the direct and indirect tax breaks, unemployment costs that the car makers are getting from the Southern states vs virtually zero for the big 3. From what little I have read these are not small amounts to be scoffed at. It would be interesting to see what those benefits are broken down to 'per car' .

 

[Darwin333]

Why do both sides insist on using bullshit numbers?

 

[Fern]

Originally posted by: GTKeeper
http://bigthreeauto.procon.org

-snip-

I'm a little leary about the accuracy of the data in that chart.

The first thing that bothered me was the same old thing about the wage disparity, which I don't believe.

I looked for some Toyota info. Link The chart shows 36,362 Toyota employees, the Toyota info shows 361,121 (and/or 69.478)

Likewise, about the executives compensation, what's to say that the Toyota exec isn't getting paid by some of the Toyota subsidiares and thus not all of it is showing up in these numbers?

I sense there may be a lot of misinformation (or misunderstood information) floating around about this issue (automakers).

Fern

 

[Fern]

Originally posted by: HomerJS
-snip-
Everyone talks about legacy costs. Remember since Toyota and Honda plants haven't been here long they don't have the huge retirement base like GM.

That is true, but also know that GM etc stayed with the traditional (defined benefit plans) pension plans for a long time; I think they only switched in 2006. Toyota etc have always used the less expensive defined contribution plans (e.g., 401k).

General Motors announced Tuesday that it would freeze its traditional pension plan and shift to less expensive retirement programs for 39,000 salaried workers in the United States.

GM and other U.S. auto firms face heavy burdens for pension and health care expenses, which they refer to as legacy costs. The companies estimate these expenses cost them $1,800 a vehicle.

By contrast, foreign automakers likeToyota, Honda, Nissan and others with factories in the United States generally do not offer traditional pension plans, relying more heavily on plans requiring employees to contribute for retirement

Link

Fern

 

[Strk]

Originally posted by: Fern

Originally posted by: GTKeeper
http://bigthreeauto.procon.org

-snip-

I'm a little leary about the accuracy of the data in that chart.

The first thing that bothered me was the same old thing about the wage disparity, which I don't believe.

I looked for some Toyota info. Link The chart shows 36,362 Toyota employees, the Toyota info shows 361,121 (and/or 69.478)

Likewise, about the executives compensation, what's to say that the Toyota exec isn't getting paid by some of the Toyota subsidiares and thus not all of it is showing up in these numbers?

I sense there may be a lot of misinformation (or misunderstood information) floating around about this issue (automakers).

Fern

The chart only refers to US employees.

 

[JS80]

Originally posted by: GTKeeper
Rick made 16 x the Salary of the Toyota CEO in 2007
Allan made 24 x the Salary of the Toyota CEO in 2007

It's much easier to manage a company that practically runs itself than to run a company that's on it's way to run itself to the ground. I bet you can put a monkey to be CEO of Toyota and it would perform the same.

 

[Dari]

Originally posted by: JS80

Originally posted by: GTKeeper
Rick made 16 x the Salary of the Toyota CEO in 2007
Allan made 24 x the Salary of the Toyota CEO in 2007

It's much easier to manage a company that practically runs itself than to run a company that's on it's way to run itself to the ground. I bet you can put a monkey to be CEO of Toyota and it would perform the same.

You clearly don't know what you're talking about.