After new tentative multi-year labor agreements were reached among the United Auto Workers and three U.S. based automakers, the industry wide implications have already begun.

Toyota Motor indicated this week that most of the automaker’s U.S. based factory workers would be provided a 9 percent wage hike. The global automaker who operates non-unionized facilities across the U.S. will reportedly cut in-half the time required for hourly employees to reach maximum pay rate, from an existing eight years, to now four years.

According to reports from Bloomberg, Automotive News, Reuters and The Wall Street Journal, wages for most Toyota assembly line workers will increase from $31.86 per hour, to $34.80 per hour, beginning on January 1, 2024. Reportedly, Toyota workers within logistics warehouses and spare-parts focused facilities will receive a similar wage hike.

In its reporting, The Wall Street Journal cited data from EY for Autos Drive America, a trade group representing BMW, Hyundai, and other foreign brands producing autos in the U.S., that in 2022, the average production worker at a foreign-owned auto production facility earned an average of $24.70 per hour.  The Journal’s report further makes reference to Toyota’s policy for typically reviewing hourly worker wage rates twice annually, in the spring, and again in the fall, to determine whether increases are needed. The last wage increase of a 25 per hour increase occurred in September.

As we noted in our prior Supply Chain Matters posting highlighting the tentative agreements reached, UAW President Shawn Fein made it rather clear that the labor union’s future target in the coming years will be to organize workers at Tesla and foreign owned companies with U.S. based manufacturing presence.

The Toyota announcement will likely be followed by other industry announcements as global automakers deal with the aftereffects of a more activist labor climate seeking a fair share of economic gains.

Yesterday, The Washington Post published an Editorial titled, What’s Good for the UAW is good for the country-maybe. (Paid Subscription) The opinion piece acknowledged that union based autoworkers have experienced real wage declines over the past two decades and were overdue for a wage increase. The editorial goes on to question whether this victory for organized labor a good deal for the United States as a whole is also given the notions of a highly cost conscious industry.

This column concludes with the following perspective:

Zero-sum thinking predominates in collective bargaining, which by its nature pits union and management against one another, for shares of one company’s finite resources. But as Detroit’s new labor deal reallocates power between the two sides, they should remember that they both — and the American public — have an interest in ensuring U.S. automakers are profitable, competitive and, increasingly, green.”

Stay tuned.


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