The three main Detroit automakers will see an increase in hourly labor costs through 2023, according to the Center for Automotive Research.
The new United Auto Workers four-year contracts for General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV — which were ratified toward the end of 2019 — will increase average hourly labor costs, said Kristin Dziczek, the center's vice president of industry, labor and economics.
The UAW ratified a new contract with Fiat Chrysler on Dec. 11, 2019, after approving a deal with Ford on Nov. 15, 2019, and GM on Oct. 25., 2019. Labor costs include wages, paid time off, bonuses, profit-sharing and health insurance for employees.
GM's average hourly labor costs are estimated to be $71 in 2023, up 12.7% from $63 in 2019 and up 29.1% from $55 in 2015, Dziczek said during a Jan. 15 webcast. Ford's hourly labor costs would be $69 in 2023, up 13.1% from $61 in 2019 and up 21.1% from $57 in 2015. Fiat Chrysler's costs would go up to $66 in 2023, up 20% from $55 in 2019 and up 40.4% from $47 in 2015.
Dziczek said while the costs are expected to rise through 2023, the "changes in real terms are quite modest" and are $16 to $27 below 2007 levels.
Per-vehicle labor costs would also increase for all three automakers, Dziczek said.
Estimated per-vehicle labor cost for GM would be $3,378 in 2023, up 25.1% from $2,700 in 2018. Estimated 2023 costs for Ford will be $3,131, up 20.2% from $2,604 in 2018. Fiat Chrysler's estimated 2023 costs would be $3,481, up 38.2% from 2018.
Companies try to counter these costs by increasing productivity, said Art Schwartz, president of Labor and Economic Associates.
Automakers can also focus on decreasing material and supplier costs, said Schwartz, who is also the former general director of labor relations for GM.