GM – A Rising Tide Should Lift All Boats – 396 Edition Darin Gilley 11/10/2014 As Wentzville Assembly opens a new chapter by building both the Chevrolet Colorado/GMC Canyon midsize trucks and the Chevrolet Express/GMC Savana full-size vans at a rate of almost 400 vehicles a shift it’s a good time to analyze the effect of increased production and overtime pay. Can the company really afford to pay two hours a day overtime and still make money? Let’s find out by starting with production and sales… Production of vehicles in 10 hours 400 Cost of each vehicle $25,000 Value of vehicles produced per shift $10,000,000 (10 mill.) Costs to GM of a Tier 2 hourly employee (Wages and Benefits) In previous articles the compensation of both a Tier 2 member and a Traditional Member w/Tier 2 Benefits (TWT2) were itemized. On straight time, the total hourly compensation of a Tier 2 member earning $15.78 an hour and benefits amounts to a total hourly compensation of $28.99. The costs of all benefits except the half of Social Security and Medicare GM contributes by law to your account are included in the straight time figure. This included the PSP, Health Insurance, Flexible Spending, Term Life, Disability, etc. Now let’s add the overtime hours, Overtime Wage $15.78 x 1.5 $23.67 GM share of Social Security – Medicare $ 1.81 Total OT Compensation per hour $25.48 Number of OT hours per shift x 2 Total OT compensation per shift $50.96 Now let’s add the 8 hours straight time and the 2 hours overtime… Total Wages and Benefits St. time (8 x $28.99) $231.92 Total OT Wages and Benefits (2 x $25.48) $ 50.96 Total Compensation per 10 hour shift $282.88 Let’s multiply that by the number of production workers per shift… # of hourly production workers per shift 1000 Total Compensation p/shift – p/employee $282.80 Total Hourly Labor Cost per shift $282,880 Damn, that’s a lot of money! What’s left after paying all that? Value of vehicles produced per shift $10,000,000 Minus Total Hourly Labor Costs $ 282,880 GM revenue after hourly production labor costs 9,717,120 Percentage of labor cost per vehicle 2.8% What’s left after paying all the hourly production labor costs, the people that actually build the vehicle? GM retains 97.2% of Ten Million Dollars! What would be the numbers look like if the next contract returned to the language on page 82 of the 2011 agreement and was in place for many years prior to that. This language set new hire pay at 70% of full base rate for their classification then increased five percent every six months to full base rate after 156 weeks (3 years). This language benefited the company by giving them three years of below standard wages. General Motors had many years of profits while this language was in place. Employees would benefit by starting at a livable wage while knowing their wages would progress according to the schedule. Morale would be dramatically improved which would improve safety, productivity, and quality. Let’s find out what this would look like… Costs to GM of an employee receiving Traditional Wages and Tier 2 benefits In previous articles I have itemized the components of an employee earning Traditional wages and Tier 2 benefits (TWT2). On straight time this amounted to $42.63 an hour in total compensation. The costs of all benefits except the half of Social Security and Medicare GM contributes to your account by law are included in the straight time figure. This included the PSP, Health Insurance, Flexible Spending, Term Life, Disability, etc. Now let’s add the overtime hours, Overtime Wage $28.00 x 1.5 $42.00 GM share of Social Security – Medicare $ 3.21 Total OT Compensation per hour $45.21 Number of OT hours per shift x 2 Total OT compensation per shift $90.42 Now let’s add the 8 hours straight time and the 2 hours overtime… Total Wages and Benefits St. time (8 x $42.63) $341.04 Total OT Wages and Benefits (2 x $25.48) $ 90.42 Total Compensation per 10 hour shift $431.46 Let’s multiply that by the number of production workers per shift… # of hourly production workers per shift 1000 Total Compensation p/shift – p/employee $431.46 Total Hourly Labor Cost per shift $431,460 Damn, that’s a lot of money! What’s left after paying all that? Value of vehicles produced per shift $10,000,000 (10 mill.) Minus Total Hourly Labor Costs $ 431,460 GM revenue after hourly production labor costs $ 9,568,540 Percentage of labor cost per vehicle 4.3% What’s left after paying all the hourly production labor costs, the people that actually build the vehicle? GM retains 95.7% of Ten Million Dollars! Just as the new Chevrolet Colorado/GMC Canyon are a new chapter in Wentzville history the next national agreement scheduled for September, 201 will be a new chapter in the book of Sacrifice and Reward. In the previous chapter all stakeholders of General Motors sacrificed together to make it through the crisis that was the Great Recession. Executives, Management, Shareholders, Taxpayers, and Workers all sacrificed to make it through that crisis. The current chapter has seen Executives and Management return to or exceed previous salary and benefits, while shareholders have resumed receiving dividends on their investment in GM. The next chapter should see the only members of the GM family still sacrificing on a daily basis, workers subject to the Tier 2 wage structure, finally be rewarded by a return to Traditional wages.
Posted on: Mon, 10 Nov 2014 16:59:48 +0000
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