Your Turn strategies for costs y levels and of saw examples both of employers se

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Your Turn strategies for costs y levels and of saw examples both of employers seeking to control/reduce pay levels. Here, we continue our earlier discussion pa on how U.s. automa Chapter 7, we talked about the implications of different pay-level stra kers In revenues. We ployers increasing have used two-tier forward. Also important is their use what might happern e structures to control labor costs and consider w of profit sharing as a way to keep fixed labor wag more in line with profitability, so that labor costs labor costs move control and making when profits decline and labor costs increase when profits increase. That reduces the As we saw earlier, a two-tier wage structure allows a company to pay new hires wage. The average hourly wage for Tier 1 workers is about $29 versus a maximumf at a lower versus United States. That number dropped to having high, fixed labor costs when the company is under financial duress. ow 19 Tier 2 workers. The average hourly total compensation is roughly $59 for Tier 1 workers about $35 for Tier 2 workers. ing both domestic and As recently as the late 1990s, the automobile industry (including both domestic a ned U. s. producers) employed 1,000,000 people in the 50,000 during the recession and bankruptcies of late last decade. Now, the Center for Aut tive Research projects that employment could grow to 650,000 in 2012 and could be more th 50,000 by 2015.68 Of course, the Big Three are expected to account for a minority share of mployment total, a big change from the old days. Currently, the Big Three have about 137 an ,000 the assembly line to build the Chevrolet Sonic. What is notable is that these workers are not GM hourly jobs combined At the GM plant in Orion Township, Michigan, about 100 workers sort parts to be used ployees but rather (UAW-represented) employees of an outside supplier. Their average hour abor cost is about $20/hour, lower not only than that of Tier I GM workers, but also lower than er 2 GM workers. As a result of using a significant number of lower cost Tier 2 workers a (even lower cost) outside supplier workers, GM is expected to be able to reduce the labor cost vehicle from $1,160 to $710. All told, GM could save as much as $72 million per year.59 Here are some questions to consider hat extent is the renewed job growth in the automobile industry in the United States due to the use of two-tier wages? 2. To the degree job growth (and increased car sales that come from more competitive labor costs) is based on two tier-wage structures; how sustainable is this approach? Consider, for xample, that Fiat and Chrysler CEO Sergio Marchionne stated in 2011 that "Long term, t system) is not a viable structure. It creates two classes of workers within the plant. Why would Mr. Marchionne make this statement? What are the potential drawba the same direction we are working two-tier structure? When would we expect any such drawbacks to materialize? .to get this organization to work in t doesn unison."70

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Answer:

According to the passage recently as end of the 90s automobile industries created more than 1000000 job to the people,both overseas and inside the U.S due to use of two their wages because their two workers($35 total compensation/hour) are cheaper than their 1 workers($59 total compensation/hor). Hence, using two their wages automobile companies reduced labour cost and it is one of the main factors of growth of automobile industry in recent decades.

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