Unionizing Toyota (TM)

July 30, 2007 by Douglas A. McIntyre

The UAW negotiations with GM (GM), Ford (F), and Chrysler (DCX) has awakened a sleeping dog. Why isn’t Toyota unionized in the US?

The media is filled with data on how much pension and health benefits add to the price of a car made by a US manufacturer. That delta is now about $25 an hour compared to the Japanese according to Forbes.

The argument that Detroit has not made cars as attractive as Toyota or Honda is irrefutbable. The US car companies have shot themselves.

But, it is also true that the cost advantage has helped swell Toyota’s treasury. In other words, as Reuters points out "union supporters argue that the Japanese automaker rode to a $14 billion profit last year on the backs of its nonunion workers."

There is a certain equity in this argument. Labor costs have helped cripple Detroit. That has helped cripple the unions as they have lost membership.

Toyota & Co. has benefitted from having no unions, but that has done nothing for UAW members.

The union may insist that changes. Especially if it has to give up more in this round of talks with the Big Three.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.