If you’re going to sell electric cars in North America, chances are you’re trying to figure out how to build electric cars here. The Inflation Reduction Act has made it a worthy investment for automakers. No Subarudespite this – Subaru remains unconvinced at the moment.
We know this from CEO Tomomi Nakamura’s comment in the company’s latest quarterly earnings report, which came out on Wednesday. During the call, Nakamura lamented rising inflation that is pushing wages up in parts of the country, which has clearly made it financially impossible to operate a second plant in the US. Subaru operated one such facility in Lafayette, Indiana, where Impreza, Heritage, Remote and Go up be done.
Things got weird, however, when Nakamura compared the hourly rate his company paid factory workers to the wages of another local business in Indiana. Courtesy of Automotive News:
“In Indiana, part-time workers at McDonald’s earn between $20 and $25 per hour, which is competitive with the wages of temporary workers at our factory,” said Nakamura. “If we build a new factory, it will be very difficult to hire new people to do it. Labor costs are increasing nowadays. Securing our Indiana plant, including those from our suppliers, was quite a challenge for us. “
I’ve never done business in Hoosier State, so it’s possible that Nakamura knows something that I don’t. But when I read the quote above, the $20 to $25 estimate made me feel tad high. There are five McDonald’s in the Lafayette area, as far as I can tell via Google Maps. At the time of writing, restaurant chain job site list a wide range of staff and management positions open between them. Those that do mention hourly rates all list between $12 and $15 per hour, “plus cash incentives.” Meanwhile, Subaru’s factory around the corner seems to be paying $17 per hour at the top of the level for “Workers”, around $19 for “Production Employees” and the rate should go up from there.
In other words, it doesn’t look like the Golden Arches are poaching a lot of workers on the Ascent assembly line. But even if they were, there are plenty of reasons for Subaru to pay people a living wage to build electric cars in America. Of course, there are boring reasons no one likes to talk aboutbut it was just a prudent business move by Subaru.
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Sure, the company can count on its classic conservatism to get it through the next few years. It’s worked wonders thus far. By March — the end of its current financial year — the brand estimates its operating profit will cross $2 billion. In the second quarter alone, Subaru sold 3% more vehicles in the US than in the same period in 2021. It is the only region outside of Japan where sales have increased.
However, that won’t last forever. Electrified models will consume ever larger pieces of the pie as the decade goes on. In the long run, some cities and Statuses will phase out the sale of internal combustion vehicles. Subaru looks forward to having a factory in Japan to produce electric cars by 2027so it is clearly visible the writing on the wall.
If Subaru falls behind and has to offer electric vehicles without the discounts many of its competitors will enjoy, it may well want to embark on investing in this side of the Pacific. , before it’s too late. Even Toyota and Honda’s motobike, criticized for being lagging behind in their own right, seem to have figured things out. If that means spending on McDonald’s on the other side of 52nd Street, so be it.
