StaffAllpar HomeMore NewsCarsTrucksUpcomingRepairsTest drives

FCA labor costs to increase by 19%

by Bill Cawthon on

Reuters reported that FCA US is looking at the biggest jump in labor costs of the Detroit Three automakers, at the end of four years.

A study by Kristin Dziczek, director of the Industry and Labor Group at the Center for Automotive Research, and consultant Arthur Schwartz, claims that FCA US’ average hourly labor cost will rise by 19%, from the current $47/hour to $56/hour by 2019. (This is not the amount workers are paid, but the full cost of their total compensation.)

FCA-LaborCosts-Web

The primary driver of the increase is the adjustments given to lower-paid “Tier 2” workers, including having those with the most seniority  advance to the Tier 1 pay scale. Tier 2 workers make up a far larger percentage at FCA US than at Ford and General Motors.

FCA US will still enjoy an advantage over Ford and General Motors, which are expected to see their labor costs rise to $60/hour — around 5% more for Ford and 9% for GM. Over four years, this is around a 1% increase for Ford and 2% for GM. All three major American automakers will continue to see labor costs substantially below the pre-2007 level.

factory

Transplant automakers, such as Toyota, Honda, Volkswagen, Daimler/Mercedes, BMW, and Nissan, will keep their cost advantage unless the UAW succeeds in its efforts to organize workers. This will be a tough sale to make from a worker’s point of view; hourly pay for senior workers at the transplant facilities is close to UAW scale. The differences in labor costs are due to health care and other benefits, which now account for a higher percentage of hourly union labor costs than wages.

The increase in labor costs does not translate into a major increase in car prices or a blow to profits. Analysts note that there are other areas where costs can be trimmed.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


Aussies go for Mopar squads
2017 Jeep Compass
Compass’ loose nuts

Another alternator recall

More Mopar Car
and Truck News

Some popular Allpar pages





Dodge Demon

2018 Wrangler JL



Staff details/contactsTerms of ServiceInformation is presented to the best of our knowledge. Plans change and sometimes mistakes are made. Decisions or purchases made based on this site's verbiage or images are done at the reader's own risk. Also see the Allpar News archives, 1997-2008 • Copyright © 2008-2017, Allpar LLC. All rights reserved. • Mopar, Dodge, Jeep, Chrysler, HEMI, and certain other names are trademarks of Fiat Chrysler Automobiles.