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Wednesday, November 19, 2008


That Was the $64,000 Question Prof Bug Asked Earlier Today at Carpe Diem

There, with a post left by the economist who runs that laudable web-site, Prof. Mark Perry of the University of Michigan, started a thread about the Japanese transplants in the US auto industry, which --- along with another post in a different thread that Prof Perrry posted --- singled out the high wages and benefits of the Detroit Big-3 compared to the Japanese transplants' wages and benefits . . . a good 45% higher: roughly $73 an hour vs. $50 for Honda and Toyota. 

Both these car manufacturers, along with Nissan and Hyundai-Kia (South Korean), are in far better financial shape compared not just with the US auto firms, but also French, German, and Italian firms, not to forget Volvo and Saab in Swden . . . the latter two foreign-owned (by Ford and GM).  And like the Big-3 firms now begging for a government rescue bailout, the same is true of the auto firms in the EU (with some variation across them) . . . but not the Japanese or Korean firms.

So What Explains the Differences

That's the big question that prof bug left in one of those two Perry threads, along with some explanatory efforts . . . but, please note, only some.  Later today, if the buggy guy can find some time, he'll do some googling, draw on his half-way decent knowledge (set out in previous writings) of the Japanese economy and corporate structures, and see if he can come up with a fuller explanation.  In the meantime, anyone reading this who actually has accumulated some hard knowledge of the Japanese auto industry would be doing us all a favor if he or she posted in the relevant thread at Carpe Diem

For that thread, click here

And Note as a Bonus

A regular poster at Carpe Diem is a fellow named Walt-G, an auto-workers union representative who acts as an intermediary between the UAW and management at GM, Ford, and Chrysler . . . or maybe just GM, I forget.  He's very bright and has been critical of both the union and management for their current troubles, just as he blames the union for not being more forthcoming in the current beggar-situation of the Big-3 with concessions about wages and pensions.  (Another poster there notes that the UAW could, if it wanted, buy out the entire Big-3 auto-industry, whose total equity in the stock market is only about $7 billion.  They could then take control of the three firms and reorganize and run them as they wanted.