Subaru not investing in US plant because of McDonald’s wages

WHAT YOU NEED TO KNOW:

• Subaru says its Indiana assembly plant has trouble competing on high wages with the local McDonald’s amid U.S. inflation.
• The automaker began selling its first electric vehicle in the country this year, but it’s not made in the U.S.
• Subaru CEO Tomomi Nakamura said “it would be very difficult to hire new people” because “part-time workers at McDonald’s earn $20 to $25 per hour.”

Auto manufacturer Subaru began selling its first electric vehicle in the U.S. this year. However, it is not made in its factory in Indiana, U.S.A.

Subaru’s EV Solterra, a collaboration with Toyota, is currently being manufactured in Japan while the Subaru Outback, Legacy, Impreza, and Ascent are produced by the company’s Indiana-based plant.

That put Subaru to no longer qualify for any federal tax credits under the Inflation Reduction Act’s new rules that require vehicles to be built in North America.

While other automakers are going to ramp up production in the area to take advantage of the incentives, Subaru won’t be joining them anytime soon. The company is pointing at McDonald’s high pay as the reason.

“In Indiana, part-time workers at McDonald’s earn $20 to $25 per hour, which is in competition with what temporary workers make at our plant,” CEO Tomomi Nakamura said during Subaru’s latest earning’s call on Wednesday, Automotive News reported.

“If we were to build a new plant, it would be very difficult to hire new people for that. Labor costs are rising now. It is quite challenging for us to secure workers for our Indiana plant, including those of suppliers.”

Subaru’s Indiana facility pays its more than 5,900 associates from $17 to over $48 per hour, according to Indeed and Glassdoor.

Nakamura added that Subaru will be operating its own electric vehicle facility in Japan by 2027. Adding a new factory in the U.S. is off the table until wage inflation begins to subside.

“It is very difficult for us to respond to. There are a number of requirements,” Nakamura said of the new EV incentive plan. “We find it difficult to figure out how the IRA will help us bring benefits to our customers.”

Nakamura is confident that production will come back to pre-pandemic levels within the next six months. The automaker is not having a hard time selling its other cars right now. In fact, it has a backlog of 48,000 orders due to continuing issues in the supply chain.

Source: Fox News