In the aftermath of the Big Three's cost-saving deal with unions, its U.S. plants must play catch-upEven Toyota (TM) gets the blues. The Japanese automaker has long prided itself on a U.S. workforce more efficient than those at Detroit's giants, and that has meant a cost advantage of hundreds or even thousands of dollars per car. But as sales of its big trucks and SUVs falter, Toyota has slowed assembly lines, leaving once-busy workers to sweep floors or do team-building exercises rather than make cars. And with the Detroit Three slashing payrolls and moving retiree benefits off their books, Toyota's edge is disappearing.
Some of Toyota's U.S. plants are now more than 20 years old, and a growing number of its workers are paid the top wage of about $25 an hour. That's less than Detroit's veteran union hands make now, but a contract inked last fall will enable U.S. automakers to replace many highly paid employees with cheaper workers. By 2011, Toyota's cost advantage over Detroit could disappear. "The Japanese automakers have been here for almost 30 years," says Michael Robinet, an analyst at CSM Worldwide, a Northville (Mich.) research firm. "They'll start to have Big Three-like costs creeping in."
Toyota is worried. Two sources close to the company say that by late 2009, Toyota's 23-year-old assembly plant in Georgetown, Ky., where most workers are at the top of the pay scale, could have the highest labor costs of any auto factory in the U.S. Toyota says that with bonuses, some of its employees already make more than Detroit's unionized workers. "I think [the Detroit automakers] could easily equal us or even exceed us in terms of having lower labor costs," says Pete Gritton, human resources chief for Toyota in North America. What to do? "There's no single answer," he says.
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