{"id":86658,"date":"2023-11-20T13:49:44","date_gmt":"2023-11-20T18:49:44","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/toyota-raises-wages-in-effort-to-keep-uaw-out-maintain-manufacturing-efficiency-nysetm\/"},"modified":"2023-11-20T13:49:47","modified_gmt":"2023-11-20T18:49:47","slug":"toyota-raises-wages-in-effort-to-keep-uaw-out-maintain-manufacturing-efficiency-nysetm","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=86658","title":{"rendered":"Toyota Raises Wages In Effort To Keep UAW Out, Maintain Manufacturing Efficiency (NYSE:TM)"},"content":{"rendered":"
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Toyota Corolla Assembly Plant<\/p>\n<\/figcaption><\/figure>\n

As workers with Detroit automakers ratify new four-year contracts negotiated by the United Auto Workers (UAW) union, the UAW\u2019s next initiative is gaining attention: Organizing non-union automakers operating in the U.S., including Toyota Motor Corp. (NYSE:TM<\/span>).<\/p>\n

Hardly had the ink dried on an agreement between the Detroit Three \u2013 General Motors Co. (<\/span>GM), Ford Motor Co. (<\/span>F) and Stellantis N.V. (<\/span>STLA) \u2013 and the UAW before Toyota announced it was raising wages of its hourly workers by 9% and improving benefits such as shortening the time it takes to reach top wages.<\/span><\/p>\n

Toyota regularly reviews and increases wages to keep them competitive with Detroit, in support of its stance that a labor union isn\u2019t needed to manage relations with its work force. Following the latest UAW contract bargaining and six-week strike, UAW president had vowed to organize the U.S. plants of Toyota and other non-U.S. automakers.<\/span><\/p>\n

You’re next<\/h2>\n

\u201cOne of our biggest goals coming out of this historic contract victory is to organize like we\u2019ve never organized before,\u201d said Shawn Fain, UAW president. \u201cWhen we return to the bargaining table in 2028, it won\u2019t just be with the Big Three, but with the Big Five or Big Six.\u201d<\/p>\n

UAW presidents have made such promises before \u2013 so far, the union has never succeeded in organizing automakers beyond the Detroit industry, whose labor union representation dates to the first half of the last century. The UAW has lost two organizing battles at Nissan Motor Co. and narrowly to Volkswagen AG.<\/p>\n

Transplant automakers from abroad have tended to locate their factories in southern locations where opposition to the labor union movement is highest. According to data provided by the Council of Economic Advisers, union membership in the U.S. peaked in the 1950s at about one-third of the private sector workforce, and has declined to just over 6% today.<\/p>\n

Given the historically tight labor market, Toyota is taking no chances. Its vaunted Toyota Production System – TPS<\/span>, whose principles rely on continuous improvement and waste reduction, has been widely admired and copied. The system depends on management flexibility to adjust factory-floor procedures as well as worker participation.<\/p>\n

Under the strictures of a UAW agreement, TPS likely would struggle. Toyota would lose some of the manufacturing advantages it currently enjoys, such as lower per-vehicle costs, compared with GM, Ford and Stellantis. All of which would hurt profitability \u2013 an advantage over its Detroit rivals that Toyota now enjoys.<\/p>\n

Bottom line boon<\/h2>\n

According to SeekingAlpha data, the five-year net income profitability margin is 7.45%. For GM, the five-year average is 5.79%; for Ford, the five-year<\/span> average is 2.46%. The profit difference represents capital that Toyota can invest in new plants and equipment or add to their vehicles as features for consumers.<\/p>\n

Privately, Toyota executives say its TPS would be compromised or unworkable due to cumbersome union work rules, grievance procedures, absenteeism and occasional work stoppages. They\u2019re quietly taking legal measures to ensure that the UAW can\u2019t get a foothold in its plants \u2013 especially raising pay and benefits to remove the possible attraction of a union contract to its workers.<\/p>\n

North America, where Toyota builds and sells more vehicles than anywhere in the world, is arguably the automaker\u2019s most important geographic region \u2013 which is why it favors avoidance of UAW representation and the liabilities that represents. (Managements of Detroit automakers, by contrast, pray nightly that the UAW organizes Toyota and the rest of the transplants, thereby narrowing the advantages non-union plants now enjoy.)<\/p>\n

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Toyota assembly plant in Georgetown, KY (Toyota)<\/span><\/p>\n<\/figcaption><\/figure>\n

After the latest pay increase, Toyota production workers at its assembly plant in Georgetown, Kentucky, will earn $2.94 an hour more at top scale, raising the hourly rate to $34.80 an hour \u2013 a premium salary. The average of all factory workers in Kentucky stands at just under $18 an hour.<\/p>\n

On Nov. 1, Toyota posted quarterly operating profit that more than doubled from a year ago on strong pricing of its gas-electric hybrids and favorable currency exchange rates. Revenue rose 24% as vehicle sales were greater in all of the automaker\u2019s geographic regions; vehicle unit sales rose 13% from a year earlier to 2.4 million.<\/p>\n

The automaker also raised its profit guidance for the fiscal year ending on March 31 and announced a $662 million share buyback program as well as an increase of its semi-annual dividend.<\/p>\n

TM rising<\/h2>\n

Toyota shares reached an all-time high of about $210 a share in January 2022 before declining with the rest of the market. Since April of this year TM has been on a tear, rising about 43%. The automaker has put solid numbers on the board and weathered the brickbats of critics who assailed it for failing to commit to 100% battery-electric vehicles (BEVs) as rival automakers have done.<\/p>\n

In the meantime, several of the automakers who were more heavily committed to electrification are now skinning back their BEV plans in light of patchy consumer demand for the technology in the U.S. Indeed, several automakers \u2013 notably Ford Motor Co. (F) \u2013 have begun to mimic Toyota and are reemphasizing gas-electric hybrids as a path toward carbon neutrality.<\/p>\n

One key data point for investors will be which foreign automaker the UAW selects to try and organize, a subject that’s likely being debated at Detroit\u2019s union headquarters. An organizing victory is important for the credibility of the union as well as for Fain, the new president. Hence, the UAW may target a smaller foreign automaker rather than Toyota, the largest and most prosperous, which commands more resources for prevailing in a workforce election.<\/p>\n

On the other hand, a union win at Toyota would resound throughout the entire transplant automotive industry.<\/p>\n

For the moment, I would handicap the chances of Toyota workers approving UAW representation anytime soon as relatively low \u2013 but not zero. Investors can still enjoy a long run of sustainable revenue, profit and return from the Japanese automaker, which goes from strength to strength with no obvious roadblocks in sight.<\/p>\n

A vote by Toyota workers to join the UAW would be a major negative for the shares. The legal procedures leading to a vote by workers can be long and cumbersome and may ultimately fail even to gain enough interest to trigger an election. It wouldn\u2019t be prudent, however, to wait for the last minute. If the UAW targets Toyota, it\u2019s already time to begin thinking about how to hedge an investment in TM.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Toyota Corolla Assembly Plant As workers with Detroit automakers ratify new four-year contracts negotiated by the United Auto Workers (UAW) union, the UAW\u2019s next initiative is gaining attention: Organizing non-union automakers operating in the U.S., including Toyota Motor Corp. (NYSE:TM). Hardly had the ink dried on an agreement between the Detroit Three \u2013 General Motors […]<\/p>\n","protected":false},"author":1,"featured_media":86659,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-86658","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nToyota Raises Wages In Effort To Keep UAW Out, Maintain Manufacturing Efficiency (NYSE:TM) | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Toyota Corolla Assembly Plant As workers with Detroit automakers ratify new four-year contracts negotiated by the United Auto Workers (UAW) union, the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=86658\" 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