How Germany builds 2x as many cars as U.S. while paying 2x the salaries

[NewsFeed]

First, let's put some salient numbers on the table: 5.5 million versus 2.7 million and $67.14 per hour versus $33.77 per hour.

The first set of numbers belong to Germany, and represent the total number of vehicles built in 2010 and the average wage of an autoworker in that country. The second set of numbers are the equivalent figures from the United States. In other words, twice as many vehicles are built in Germany every year than in the U.S., and German autoworkers make double what their American counterparts earn.

Interestingly enough, all three major German automakers - the BMW, Daimler and Volkswagen groups - operate facilities in both their home market of Germany and in the U.S. And, just as intriguingly, the factory workers in the southern states of America who work for German automakers aren't paid wages that even come close to matching those of their German counterparts.

Why the disparity? According to an article from Remappingdebate.org, it has to do with an ongoing "race to the bottom" when it comes to wages in the U.S. and a mutually beneficial working relationship between German automakers and IG Metall, the German equivalent to the United Auto Workers union in the States. In short, German automakers are paying Americans less because they can.

There's an entire three-page article with commentary from industry insiders and other experts on the matter, and we suggest you read it for all the details on the great wage disparity that makes the U.S. a low-cost country for German automakers operating outside their home borders.

How Germany builds 2x as many cars as U.S. while paying 2x the salaries originally appeared on Autoblog on Tue, 27 Dec 2011

[chittychittybangbang]

Preemptive warning: I realize that since this topic covers labor and wages it will naturally have a political element. However, political bickering will result in moving to off ramp and then thread lockdown.

[Steadyhand]

Those tilt-back "office" chairs look precariously unsafe....hope there's no oil/water spills where those guys are wheeling....

[nickeasy]

One should be wary of comparing another nation's wage rates with their own. Our economies are not equal. A disparity of wage rates between German and American auto workers is not all that must be considered. The cost of living, taxation, currency exchange rate, and government system in each of these countries is different. Another comparison that needs to be made is how many German worker hours are required to complete one vehicle versus American workers. The Germans may produce vehicles much more efficiently whereby production is higher per worker and therefore higher wages.

Foreign companies establish factories in the U.S. because it is favorable to them in terms of costs, prices, and profits. Lowering costs enables the seller to offer lower or maintain current prices. Increased demand due to lower costs increases production and the labor or new equipment necessary to increase that production.

Quote from NewsFeed - "twice as many vehicles are built in Germany every year than in the U.S.". Is that bad? They must have something that people want and can afford.

I, for one, do not wish to see a world economic system as the pointed article seems to suggest. I wish to keep what's left of a free market place. It's just economics. Would you buy the same widget from "A" for $1.10 that you can get from "B" for $1.00? And if you are "A", won't you see what costs you can reduce so that you can sell the widget for $1.00? ......or go out of business.

Pardon me while I step down from the economics soapbox.

Perry


From Motor Trend, December 30, 2011:

"UAW factories have seen more job losses in the past three decades than non-union car assembly plants over the same period"
Read more: http://wot.motortrend.com/uaw-to-tar...#ixzz1iKuAzAVV

"in 1977, workers at Volkswagen’s plant in Westmoreland, Pennsylvania, joined the UAW. The VW plant was later closed in 1988."
Read more: http://wot.motortrend.com/uaw-to-tar...#ixzz1iKtzkfAc

[Keith_J]

Nickeasy has it right. The USA has the highest corporate income tax. This is why manufacturing is repressed.

[Seatman]

In the UK and I reckon Germany too the cost of a lot of things is a lot more expensive, we get shafted on fuel duty for instance. I think it's fair to say that accomodation and food are also a lot more expensive as well as clothing etc. As for 2x the cars, they are a german car and they sell all over europe. The states is just a small fraction of the cars built so it makes sense. I also read about folk in the states prefering German built VW's because they reckon they're better built.

[nickeasy]

Originally Posted by Seatman

I also read about folk in the states prefering German built VW's because they reckon they're better built.

Spot on Seatman. I prefer mine from Wolfsburg.

[Keithuk]

I see VW are thinking of a factory in Turkey.

Dogus Rises on Partnership Talks With Volkswagen: Istanbul Mover

[Seatman]

Yeh it'll be the volkswagon kebab and it'll run on used cooking oil

[Parsnips]

Originally Posted by Keith_J

Nickeasy has it right. The USA has the highest corporate income tax. This is why manufacturing is repressed.

Having a higher theoretical tax rate means nothing if loopholes let US companies pay way less.

http://www.nytimes.com/2011/05/03/bu...y/03rates.html

And moving jobs overseas isn't just because of tax strategy , it's also about making more money and making Wall Street happy.

I think we can all agree that something is wrong in the USA even if we don't agree on how to fix it.