Last month Rick Wagoner, Chairman and CEO of General Motors (GM), wrote an opinion piece in the Wall Street Journal titled A Portrait of My Industry. I wondered if the title itself said something about the way GM runs it's business. What is good for GM isn't good enough for America these days. Wagoner said:
So what are the fundamental
challenges facing American manufacturing? One is the spiraling cost of
health care in the United States. Last year, GM spent $5.2 billion on
health care for its U.S. employees, retirees and dependents--a
staggering $1,525 for every car and truck we produced. And the figure
is going up again this year. Foreign auto makers have just a fraction
of these costs, because they have few, if any, U.S. retirees, and in
their home countries their governments fund a much greater portion of
employee and retiree health-care costs.
Some
argue that we have no one but ourselves to blame for our
disproportionately high health-care "legacy costs." That kind of
observation reminds me of the saying that no good deed goes unpunished.
That argument, while appealing to some, ignores the fact that American
auto makers and other traditional manufacturing companies created a
social contract with government and labor that raised America's
standard of living and provided much of the economic growth of the 20th
century. American manufacturers were once held up as good corporate
citizens for providing these benefits. Today, we are maligned for our
poor judgment in "giving away" such benefits 40 years ago.
(emphasis mine)
At the 2006 Automotive News World Congress, Steve Miller, CEO of the bankrupt Delphi, added to this line:
We tend to blame globalization for all our problems. I think there is a deeper issue. What is at stake here is the basic social
contract in our traditional industries: steel, airlines, and autos.
What these three industries had in common was a longstanding
social contract, funded by employers, and worked out over the past half
century. The unions in these industries
were able to win major economic gains for their members, while their employers
passed along the costs to customers. Elaborate defined benefit retirement
programs were included in the mix. Back
in the days when you worked for one employer till age 65 and then died at age
70, and when health care was unsophisticated and inexpensive, the social
contract inherent in these programs seemed affordable.
Today, defined benefit retirement programs are undergoing
major revision and replacement as industrial compensation policy. First off,
the lack of portability of defined benefits forces people to stay with one
employer, even though we have a much more mobile and flexible population these
days. Second, the notion of having all your retirement eggs in one basket – your employer – is a concentration of risk that is proving to be inadvisable
for many people in today’s fast moving economy. Finally, these programs have a
way of toppling traditional large employers, and disrupting employees and
retirees with limited flexibility to cope. You have to ask whether companies
should be making open-ended promises to its workers for fifty years down the road.
(emphasis mine)
I wonder if I am the only one who thinks that what Wagoner and Miller are arguing for is universal health care in the US.
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