Good news for Toyota USA workers

https://www.axios.com/2023/10/31/toyota-raises-uaw-strike-ford-gm

TL, DR: Right after the UAW reached their deal, Toyota announced hourly wage increases for all US factory workers, $2.94 for assembly line, 3.70 for skilled positions.

Good for them! That's a nice bump. I'm sure it's an effort on Toyota to make unionizing seem unnecessary, but either way, the workers benefit.

Like they say, a rising tide lifts all boats. I'm sure these Toyota employees were watching the UAW with great interest, good for the UAW for getting such a great deal.

 

Get ready for Toyota prices to rise even more next year to make up for that

 

Labor is about 5% of the cost of a vehicle, and Toyota is forecasting a 26B net profit. They'll be fine.

This will also most likely be cheaper for them than fighting off a unionization effort. There's also a value in having happy employees and high morale, as I'm sure this has generated.

 

I'm sure it's an effort from Toyota to keep all of their best employees from switching companies.

This is exactly how I benefit from the union, despite being non-union. If my company doesn't stay competitive, people will leave for union jobs. It's happened before, and suddenly everyone gets a nice raise.

 

Any complaints about inflation and costs shouldn’t be directed at Toyota - they are responding to market pressures. Namely labor market pressures.


As it is supposed to work.

The real culprit is what occurred with interest rates, housing, lockdowns, and savings rates at the beginning of the pandemic, and the Fed’s refusal to recognize that they had an inflationary problem on their hands.

It’s not going to get any better until interest rate increases, combined with people burning through whatever savings and home equity they are willing to extract, slows the economy down to the point of recession.

Most annual “raises” are adjustments to keep up with inflation. Unless you got a double digit raise at any point, you are poorer now than you were - as are all these workers.

Remember, consumption is voluntary. Stop buying and prices for a particular item will begin to get more sensible. Maybe.

 

Going bankrupt screws the shareholders. If the large institutional investors that control enough of the shares to make some serious moves are unhappy, they can make their voices known to the company and board, or through a proxy battle to replace the board.

No company wants to go that route. Except airlines. It’s REALLY good for an airline to go bankrupt.

Ironically, EVs hold some serious potential for keeping labor costs down — and that’s what the UAW is really worried about long run. Think of them as a loss leader for the time being.

As for Toyota and everyone else, they are located in Right to Work states, which means they don’t have too much to worry about in the form of unionization. Culturally, those states don’t really tend to cotton to unions too much, even though they might be better off if they did or were at least on the fence. The flip side of this is that they also tend to receive some sweetheart deals in terms of the taxes they pay.

So while GM got a bailout, and Chrysler was given to Fiat, they are also a bit of a prisoner of their own geography and history. Meanwhile, all the foreign car companies deal with unions in most of their other markets, just not here.

 

The closer Toyota’s workforce gets to resembling lazy UAW slobs, the worse the product will be become. Hopefully this move will make unionization less likely.