Blog: Labour costs in car manufacturing – just how important are they?
Dave Leggett | 2 May 2012
How do costs compare between a car manufacturing plant in the UK and a plant in Turkey? Earlier this week I got the opportunity to put that question to Tony Walker, Deputy Managing Director, Toyota Motor Manufacturing UK. His answer surprised me. He said that much of the cost of manufacturing is down to parts and logistics. Okay...and labour at the assembly plant? He put that at just 6-8%. I must say I thought it would be a larger proportion than that. Making the C-segment sedan in Turkey for shipment to markets in southern/southeastern Europe therefore makes sense. And Burnaston serves as the manufacturing plant for the higher spec C-segment hatch that mainly sells in northern Europe; no big incentive to go for lower labour costs there on the basis of that kind of percentage.
There's an interesting difference between Toyota and Nissan in their respective UK plant strategies. Nissan uses Sunderland for nichey models like Qashqai and Juke (Leaf from next year). It now brings in the Micra for Europe from India (where, presumably, labour costs and parts costs are significantly lower than in Europe – sufficient to more than compensate for the EU tariff and shipping costs). Toyota on the other hand is using its UK plant for more mainstream cars.
Except that Nissan is now going to make a C-seg hatchback (Invitation-based) for Europe in Sunderland as well...
OK, I know I should get out more, but, as well as being a big fan of current auto manufacturing (BMW is always good for an annual show 'n' tell), ...
Mitsubishi is in the news today and it reminded me of a bit of history. Some of you may recall the auto industry and Japanese public were stunned when it emerged in the summer of 2000 that Mitsubishi ...
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