Episode 950 – Canadian Labor Most Expensive, Ethanol Keeps Gas Prices Down, Posawatz to Fisker

August 15th, 2012 at 12:07pm

Runtime: 8:21

The CAW enters negotiations today and Ford says Canadian labor is the most expensive in the industry. Dr. Candace Wheeler, a technical fellow at General Motors, says ethanol has kept gas prices lower than they would be otherwise. Fisker just hired the recently-retired Tony Posawatz to be its new CEO. All that and more, plus You Said It!

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Hello and welcome to Autoline Daily, where we bring you the most important facts to learning about what’s happening in the global automotive industry.

CANADIAN LABOR MOST EXPENSIVE
We all thought that the restructuring Detroit’s automakers went through in 2009 left them with some of the most competitive labor costs in the industry. But as Ford negotiates with the Canadian Auto Workers union, it provided Bloomberg with some of the labor costs it pays in different countries around the world. And it turns out that Canada’s auto workers are the highest paid in the world at $79 an hour. Next is the United States at $64 an hour. Germany is $48, Australia is $35. This includes all labor costs, including retiree benefits. So it’s not as if the workers see this kind of money in their weekly paychecks. Nonetheless, it’s amazing to see that US labor costs are higher than they are in Germany.

ETHANOL KEEPS GAS PRICES DOWN
Ethanol production in the United States is a political hot potato, but most motorists don’t know that it’s significantly holding down the price of gasoline. Dr. Candace Wheeler, the foremost bio-fuels expert at General Motors, tells Autoline Daily that if ethanol were eliminated from gasoline the price of gas would go up anywhere from 84 cents to $1.07 a gallon. She cites studies from Iowa and Louisiana State Universities. Ethanol comprises about 10% of a gallon of gas in the US, and a gallon of ethanol is significantly cheaper than a gallon of gas. By displacing 10% of gasoline, ethanol keeps gasoline supplies higher and that contributes to keeping the price down as well.

POSAWATZ TO FISKER
Fisker just hired the former head of GM’s global electric vehicle development, Tony Posawatz as its new CEO. He replaces Tom LaSorda, who will also step down as chairman but remain with the company as an advisor. You may remember that between leaving GM and joining Fisker, Posawatz was picked by Drew Winter, the CEO of New America Motors to join his company during last month’s Autoline After Hour’s Automotive Draft. Winter exclusively tells Autoline Daily that “New America Motors regrets the loss of Tony Posawatz to Fisker Automotive, but wishes him well. As we mentioned during the draft, NAM holds Posawatz in the highest regard and we did not expect him to stay retired very long. Unfortunately our imaginary pay package could not compete with a real one.” Click the link in today’s show notes to watch which executives my colleagues and I chose to lead our fictional car companies.

CAFE NEWS
NHTSA was supposed to release the final CAFE targets today, but now it says it will miss its own deadline. The Detroit News reports that foreign automakers slammed the regulations as favoring GM, Ford and Chrysler. German automakers complained it favors trucks which are the bread and butter for GM, Ford and Chrysler. Japanese automakers were upset that there isn’t more flexibility in using car credits to meet truck standards.

CHEVY’S RESCUE SQUAD
As sure as the sun rising in the morning, classic cars will break down. That’s why Chevy is deploying its Rescue Squad Silverados at the Woodward Dream Cruise this year. The trucks will be cruising around with technicians from a couple of local Chevy dealers to assist cars of any brand suffering from dead batteries, flat tires and other small problems. Bravo Chevy, that’s a great way to attract people to the band.

Coming up next, it is time for You Said It!

Chuck Grenci saw our report that Frito-Lay is going to start using electric delivery trucks, and had a very interesting observation. “It might be almost as ‘green’ if Frito-Lay kept their delivery trucks diesel and burned their manufacturing cooking oil in their vehicles.” Chuck, that’s a great idea. Plus, they could use the smell of the exhaust as a marketing tool to make people want to eat more potato chips.

XA351GT saw our report that GM CEO Dan Akerson ripped into the company’s employees at a town hall meeting, and has this to say. “Nothing spurs on company loyalty more than a butt chewing for the boss. Good luck with that Dan. It never worked at my job. Could this be the reason of the recent exodus of top brass at the General?” I think there are a variety of reasons why we’ve seen a number of execs suddenly leave the company. But I’m sure the leadership style of the CEO has played a role in that.

Brett was not impressed with the high performance version of the Mini we showed you earlier this week. “John Cooper Works Mini GP, eh? I thought cocaine was God’s way of telling you, you had too much money…For the same amount of money you could buy a shifter kart for yourself and seven of your friends. Now *that* would be some fun!” What a terrific idea, Brett. Go fast and do it racing wheel to wheel with your best friends, I don’t think it would get any better than that.

Lex says, “I know that the Nissan NV200 will be the taxi for both New York (Yellow Version) and London (Black Version). Why doesn’t Nissan sell a passenger version of the NV200 to the general public?” Lex, I imagine that Nissan is worried that a passenger version of the NV200 would steal sales from the Quest minivan. However, sales of the Quest are going nowhere. So far this year sales are barely over 12,000 vans, so maybe the NV would do better, if you can get past the way it looks.

Stu says the new crash test from the IIHS is a real problem. “As an engineer for a Tier 1 underbody supplier, I can tell you that this new “narrow-offset” crash test is a very difficult test to pass. It’s certainly giving us headaches! The test hits just outside of the frame rails, which are what is designed to carry the crash loads. Like you said, John, it’s designed to rip the side of the car off, but I do see the reason behind it. It will be very interesting to see how the different OEMs handle this new crash mode.” Thanks for that insight Stu, very valuable. And we sure would like to hear from other engineers in the industry on the issues you’re facing as you develop new cars and trucks.

Earlier in the show we mentioned how Chevrolet will field repair trucks to help out any classic cars that break down at the Dream Cruise. Well, join us tomorrow night as we take Autoline After Hours to the center of the action at the Mopar display on Woodward Avenue. Even though the official Dream Cruise is on Saturday, it’s already gotten going. Join me and the Autoextremist Peter De Lorenzo, for the best car talk in the business.

And that wraps up today’s show, thanks for watching, we’ll be back here tomorrow.

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22 Comments to “Episode 950 – Canadian Labor Most Expensive, Ethanol Keeps Gas Prices Down, Posawatz to Fisker”

  1. dcars Says:

    The Nissan Quest is one ugly Mini Van.
    Labor work rules and flexibility with jobs banks can lead to higher costs of labor. In addition comparing European labor with their north american counter parts, consider the plant closures, work week hours and productivity.

  2. Lex Says:

    I do not believe that Ethanol is keeping the price of gas down. In my area E85 is just as or more expensive than regular. The limited availability of E85 allows gas stations to charge a premium price. When gas gets over $4.00 per gallon who really cares about a few pennies difference anyway!

  3. G.A.Branigan Says:

    John,your sponsor Bosch says that clean diesels will double here in the USA……..can you elaborate on that?

  4. G.A.Branigan Says:

    Here in southern Oregon we don’t have any E85.So much for keeping alternate fuels available……

  5. C-tech Says:

    As Ford provides these “hourly” labor rates in a contract negotiation, how do they determine these rates? What goes into the calculations? How are the various factors weighed? I noticed Mexico was left out, why?

  6. Chuck Grenci Says:

    So, how can a 10% reduction of usage of gasoline yield a 25% saving in total cost (especially when ethanol production costs more to produce than the final product yields in energy); I’m thinking the study that proclaimed these figures perhaps didn’t consider all the figures and other variables involved. Color me skeptical.

  7. sdjim Says:

    That is the most convoluted mathematical logic ever ! If using her statement, then 100% gasoline blend would be $1.07 or $0 .84 cents more expensive than the 90% mix now. Let’s use $ 3.95 premium, so adding $1.07 to the price you would have gas at $5.02 – 90% of that would be $4.52, so to get back to $3.95 the cost of the ethanol would have to be MINUS $0.57 cents. or am I missing something here?

  8. Drew Says:

    Ethanol cuts your GAS MILEAGE by ????/mpg?

  9. Charles Domanski Says:

    John, you really look to be making American workers out to be greedy. Why don’t you tell everybody the cost of German auto workers does NOT include the cost of health care which the Germans and every other industrialised country supplies to all people living in those countries. The Canadian workers wages are probably figuring in the cost of health care even though the companies don’t have to pay for it. This scale of wages is really skewed to make the American auto workers look far more greedy then almost every body else.
    Just out of curiosity John, how much does your pay work out to by the hour?? I am willing to bet it’s a lot more then even the imaginary amount the Canadian are supposedly making. Come on John, tell the truth now. How much do you really make on average, per hour? Can you even figure it out??? Try taking the cost of health care out of the equation and it would look a lot different as far as the American auto workers are concerned. It’s time to stop trying to be like C.U. which just plain lies about almost everything they supposedly test. And as far as the new test by the Insurance industry backed IIHS, it looks to me like they are just like the E.P.A. They will come up with all kinds of just plain B.S. just to keep thier jobs. It is an incredible bunch of bull. This country is run by a bunch of special interest groups. And sooner or later thet will succed in completely doing away with any self propelled family vehicle altogether. No wonder I hate the whole stinking government. Each and every one of the people in government are only looking out for themselves. I believe it’s up to people like you to rip away all the crap and tell us the truth about what is really going on in the auto industry.

  10. guybob Says:

    EVERY TIME I SEE AN ETHANOL PLUG, IT SEEMS TO COME FROM A CORN STATE. WHAT IS GOING TO HAPPEN WITH OUR CORN SHORTAGE WITH THIS SUMMERS DROUGHT AFFECTING GAS AND FOOD PRICES. DRILLING SEEMS A LOT MORE SOUND TO ME

  11. Buzzerd Says:

    Charles- the Canadian rate doesn’t include health care costs, except suplemental health care, such as dental, vision, drugs etc.
    John shouldn’t it be ” the Canadian LABOUR rate”

  12. cwolf Says:

    The wages given are inclusive. Subtract benifits,legacy and other costs the labor rate of Canadians is $34/hr and US $28. Germany hides actual cost very well. The manner in witch Germany operates is so differnt from our own that knowing their mean wage is meaningless. Once the CAW accepts the fact there is a 5-7% difference between wages in southern states and even greater in Mexicoland,the workers have no choice but to face reality or see the autos they once made wearing sombreros.

  13. Todd McGlynn Says:

    I would like to say that wages are relative to where you live.Cost of living in Mexico is quite different than that of CANADA!!

  14. Kit Gerhart Says:

    #8,
    Ten per cent ethanol cuts your mpg by about 3%. 85% ethanol cuts your mpg by about 40%, or something like that. Take a look at the window sticker on a “dual fuel” vehicle and you can see the difference between the ratings for gas and E85.

  15. Kit Gerhart Says:

    A passenger version of the NV200 would be really crude, and soiw, compared to Odyssey/Sienna/Grand Caravan. Unless they could sell an NV200 REALLY CHEAP, I can’t imagine many people buying them, even if they built a “civilian” version. The niche market of people wanting to drive something that looks like a New York taxi would be pretty small. If it looked like the old London taxi, though, it would sell, no matter how it performed.

  16. XA351GT Says:

    My Dad used to run alky in his go-kart. He said you had to jet 3 sizes bigger. So straight alky burns 3 X as straight gas. If my info is correct. Kit’s numbers sound pretty good to me. 3 % doesn’t sound like a lot ,but if you couple that with the states that get stuck with oxygenated fuel in winter it really pulls down the mileage., sadly I don’t see either of these as the advertised reducing of emissions as much as allowing stations to sell more fuel and make more money.

  17. XA351GT Says:

    C tech , good question ,I think we all know the answer. They get paid 2 tacos and a shot of tequila a day.

  18. G.A.Branigan Says:

    Give the USA more clean diesels and then we wouldn’t need no steenkin’ corn fuel.

  19. Bob Wilson Says:

    The ethanol effect allows lower quality, heavier, crude oils to be refined and blended with ethanol to extend the gasoline supply. According the to US Energy Administration, gasoline profit margins are very thin and adding ethanol has a disproportionate effect on supply-and-demand. When something is in short supply, small changes in availability jack the prices. The original papers are an interesting read and include factors such as monopoly refineries (aka., West Coast.) This latest report is the third, an update, of a series started nearly four years ago. – Bob Wilson

  20. Chuck Grenci Says:

    ‘XA’ #15, three sizes (jets) bigger doesn’t mean 3 times as much alcohol versus gasoline; it is just incremented jet sizes (what ever that may be) larger, though your right in stating you need more volume when running alcohol (and it might have been methanol in those carts).

  21. Kit Gerhart Says:

    Here is the amount of energy available from a liter of gas, ethanol, and methanol:

    Gasoline 32.6 MJ
    Ethanol 21.1 MJ
    Methanol 15.8 MJ

    The carts mentioned almost definitely would have been running methanol, not ethanol.

    Both ethanol and methanol have high octane ratings, so engines set up for running alcohol fuels all the time can run very high compression ratios. Unfortunately, the “flex fuel” vehicles sold can’t take advantage of the high octane rating of E85, because the engines need to also burn regular gas.

  22. Brett Says:

    Methanol is desirable as a racing fuel despite it’s lower BTU rating because it less prone to preignition and you can run more ignition advance.

    It also cools the intake charge considerably when it atomizes. This adds up to a denser fuel/air charge with a higher net BTU value that you can use with a higher compression ratio and more advance.

    It’s also a PITA to run in a “tiller motor” go-kart engine. :)