Toyota is Lowering Wages and Benefits in the U.S.

Toyota has just by-passed General Motors becoming the largest auto company in the world.  For the first quarter of 2008, Toyota sold 2.41 million vehicles worldwide to GM's 2.25 million.  Also, for the first time, Toyota has passed Ford in sales as the second largest auto company in the U.S. (In May, Toyota pulled within 10,000 vehicles of overcoming GM in sales.)

Toyota is now in a position to set, and lower, wages and benefits across the U.S. auto industry.  In September 2007, the Wall Street Journal reported "...that Toyota Motor Company"now sets the bar for labor costs in the U.S. auto industry."  The industry paper, Automotive News (August 13, 2007) reached the same conclusion.... "Toyota is going to set the pattern for the entire industry---wages, benefits and pensions"."

Currently, Toyota wages and benefits in the U.S. are 25 to 30 percent lower than those paid by the Big Three auto companies—General Motors, Ford, and Chrysler.  U.S. auto companies pay anywhere from $63.65 to $70 per hour in wages and benefits to its workers while Toyota pays $47.50 to $50 an hour.

Toyota held its wages and benefits down by setting up non-union plants in the South, far from auto industries' stronghold in the upper Midwest.  (Toyota has just one unionized plant in Fremont, California, which is a joint venture with G.M.)  To keep the unions out, Toyota has been paying hourly wages which are roughly comparable with the Big Three, but with much lower benefits.  Toyota pays around $25 per hour in comparison with G.M.'s $26 to $28.

This is about to change.  By April 2008, the Wall Street Journal was reporting that "Toyota Motor Company is now pushing to lower labor costs in the U.S., say people familiar with the matter".Toyota has stopped pegging its wages to UAW rates when it builds new plants, company executives said.  It won't cut wages of current workers, but new hires will be paid no more than 50 percent above the prevailing manufacturing wage in the area where a plant is located, they said."

In fact, months earlier, in September 2007, an internal memo was leaked at Toyota's giant Georgetown, Kentucky plant laying out management's plans to cut $300 million in labor costs across Toyota's North American operations over the next three years.  Not only would new hires come in at lower wages—no longer comparable to U.S. union wages—but benefits would also be cut, including reduced health coverage.  (New York Times, September 4, 2007)

For example, if the prevailing manufacturing wage in Kentucky—including first-time supervisors—is $14.62 an hour, Toyota will pay, at most, just 50 percent above that, or $21.93 an hour, which is down $3.07, or 12 percent, from its current $25 an hour rate.

With Toyota leading the way, the U.S. auto industry is now locked in a race to the bottom. Not to be outdone, Hyundai of South Korea recently opened an auto assembly plant in Montgomery, Alabama offering starting wages of just $14.00 an hour.

Tokyo 22 Percent More Expensive Than New York

Cost of living comparisons between the U.S. and Japan are very difficult to calculate.  However, one reliable international survey of living expenses for expatriate management-level personnel living abroad shows Japan's Tokyo ranking as the fourth most expensive city in the world to live in, with New York City ranking 15th.  Tokyo was 22 percent more expensive than New York.

Mercer's Annual Cost of Living Survey March 2006-March 2007

Comparative cost of over 200 items including housing, transport, food, clothing, household goods and entertainment, covering 145 cities on six continents.

$138 Billion U.S. Trade Deficit in Autos, Trucks, Parts

In 2007, the U.S. had a $138,228,970,000 trade deficit in autos, trucks, buses and parts. The U.S. imported $259.2 billion worth of vehicles and parts, while exporting just $120.9 billion. The U.S. is running a vehicle and parts deficit of $11.5 billion a month.

Toyota's Supply Chain Riddled with Sweatshop Abuse

"It was like prison."-Toyota Parts Worker

He worked in a subcontract plant on the outskirts of Toyota City supplying auto parts to Futabai Industrial Co. LTD, whose main client is Toyota.  With $100 million in annual sales, Futaba is not an insignificant player.

At the subcontract plant, the hours are grueling and the work dangerous.  Half the workers are full-time employees while the other half are temps, who have zero rights and are paid half the wages full time workers are.  The normal shift was supposed to be from 8:30 a.m. to 5:30 p.m., or nine hours, with an hour break for lunch, five days a week.  The reality was quite different.  The typical shift was 15 to 16 ½ hours a day, from 8:30 a.m. to 11:30 p.m. or 1:00 a.m..

The workers are allowed one, or two, or at the very most, three days off a month.  All overtime is mandatory.  Routinely, the workers are at the factory 97 hours a week, but it was not uncommon to work even longer.  For the last week of October 2007, the worker we interviewed had been obligated to work seven days, most often 16 ½ hours, from 8:30 a.m. to 1:00 a.m., putting in a 108 hour week.  When we questioned him on this, he said "Yes, it is impossible, but we did it.  Everyone was exhausted but we couldn't do anything to change the situation.  It was like prison."

He worked at a large metal stamping machine, stamping out cross member bars (which are used as engine support) with a mandatory production goal of completing 1,300 cross bars per hour, or one every three seconds!  The work was relentless, exhausting, numbing and dangerous.  In a 15 hour shift, he would complete 19,500 operations. At night, he often could not sleep — despite being exhausted — because of the constant throbbing pain in his shoulders and arms.  His hands also started failing him, and he had trouble holding a glass, which would often just fall from his hand.

No one was paid anywhere near the overtime legally due to them.  There were no paid holidays.  He had friends and neighbors who also worked in other subcontract plants in Aichi Prefecture producing auto parts, where conditions are just as bad.  We asked him what the workers thought of Toyota's Just in Time system — "The system produces only what we need when we need it and as much as we need."  "The Just In Time system," he said, "is a way of shifting the deteriorating working conditions to subcontract plants, with workers bearing the cost of long hours and injuries."  Under such conditions, many workers suffer from repetitive stress disorders.  In subcontract plants, temps and even full time workers who are injured, are simply fired and let go without benefits.  He also admitted that working the many hours under such conditions, they often make mistakes, producing many defective parts.  Often the workers will have to stay working off the clock from 1:00 a.m. to 2:00 a.m. to fix the defective auto parts.  Despite all the suffering and abuse, the man did not want his name used or that his subcontract plant be mentioned.  If his factory was named, Toyota would immediately pull all its orders and as a result everyone would be fired.  The workers are in a trap, and especially with subcontract workers we heard his fear expressed over and over again.  It was the same with the excessive mandatory overtime.  When we asked why the workers did not just go home after working 10 to 12 hours, he said the feeling was that "if they didn't work the overtime to meet Toyota's [Just on Time] orders, the factory would lose its contract, go bankrupt and everyone would lose their jobs." We never expected to find such fear among Toyota employees and subcontract workers.  This shocked us.  Like every other worker we spoke with, the general consensus is that over all, working conditions and wages are deteriorating across Japan, and — like the U.S. — the middle class is under attack and shrinking.

Subcontract Workers' Hours Record

 

 Toyota Also Spreads Fear In the U.S."They [Toyota] want people to fear losing their jobs"

This is how New York Times reporter Jeremy W. Peters described Toyota's scare tactics at its non-union plant in Georgetown, Kentucky: "...and over the last few months, Toyota management has summoned small groups of workers at its colossal vehicle assembly complex here to attend a presentation titled "Growing in a Changing Market: State of the Automotive Industry." Executives describe the presentation as a routine update for the workers. Workers are shown a map with the locations of shuttered Big Three auto plants and a breakdown of auto workers' average wages, from Thailand to Mexico. While no Toyota executive explicitly says it, the theme of the presentation, according to workers who have seen it, is that Toyota will end up in the same troubled waters as GM if something does not change."

--New York Times, September 4, 2007