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One of the reasons the US automakers have such structural financial problems is that they are on the wrong side of the dependency ratio which is the number of workers vs. the amount of retirement commitments.
The actual cost for the workers actually making a car in a US plant is reasonably competitive with similar foreign manufacturer's US plants.
The difference is that US auto makers have a dependency overhang for all the ex-employees receiving pensions, healthcare, etc, whereas the majority of the foreign owned plants haven't been in operation long enough to have 20 year employees retiring. (And even if they did, their US business model, developed in a very different era (Reagan and beyond,) doesn't include the same level of retirement commitments.)
(This is why you see such huge gaps when different sides cite the "labor cost" of making a US vehicle. Are they counting the workers currently on the line or dividing the total HR payout by the total number of cars.)
The real horror is that as these firms continue to shrink their workforces, that dependency ratio, the number of active workers supporting the retirement commitments, gets increasingly worse.
And, no, I don't see an answer until many of those retirees pass away, and workers under the newer contracts pass into retirement.
(Maybe you could argue a single payer health system would allow Ford/GM to take their retiree health costs off their books.)
The actual cost for the workers actually making a car in a US plant is reasonably competitive with similar foreign manufacturer's US plants.
The difference is that US auto makers have a dependency overhang for all the ex-employees receiving pensions, healthcare, etc, whereas the majority of the foreign owned plants haven't been in operation long enough to have 20 year employees retiring. (And even if they did, their US business model, developed in a very different era (Reagan and beyond,) doesn't include the same level of retirement commitments.)
(This is why you see such huge gaps when different sides cite the "labor cost" of making a US vehicle. Are they counting the workers currently on the line or dividing the total HR payout by the total number of cars.)
The real horror is that as these firms continue to shrink their workforces, that dependency ratio, the number of active workers supporting the retirement commitments, gets increasingly worse.
And, no, I don't see an answer until many of those retirees pass away, and workers under the newer contracts pass into retirement.
(Maybe you could argue a single payer health system would allow Ford/GM to take their retiree health costs off their books.)
posted by mikevotes at
10:43 AM
3 Comments:
The single payer health care angle is where I was going. But you're right. Unless there's a way to restructure retiree commitments, it'll be hard. As an extreme solution, the government could set up a temporary, nationalized pension administration system whereby we take on the outstanding retiree benefit administration until that populations dies off... if you'll pardon my bluntness.
However, no matter how you slice it, we are demonstrably a lesser nation today than we were a generation or two ago.
By
-epm, at 11:27 AM
The single-payer health care system is exactly what is needed, but decades ago. GM has about $2,000 in health care costs wrapped up in every vehicle, and as production slumps, that goes up as you pointed out.
Eventually the big three go under and new players enter the market without the overhang from the retirees, which is exactly why the U.S. system doesn't work. No one is getting life-time medical anymore, and if you are, you can bet that the company you are getting it from will go under someday and you will have nothing.
Not that it is perfect, but government health-care is really the only fair way to go.
By
Praguetwin, at 1:29 PM
Retiree commitments have been the hangups in all the recent GM/UAW negotiations.
As for single payer, it's really surprising that alot of the older companies aren't out in front on the issue.
By
mikevotes, at 1:54 PM
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