Thursday, December 11, 2008
Car company costs
David Leonhardt has a great article in the NY Times about the car company costs. First of all, if you don't count the costs of retirees—which current workers obviously don't get as part of their pay package—labor costs for the big three are not that different from labor costs for Japanese automakers in the US. But even more striking, if you reduced the big three labor costs to Japanese levels, that would cut only $800 from the cost of each car. And that's because labor costs are only 10% of the cost of an automobile. That's amazing. Where does the rest of it go?