Wagoner critical of fed's lack of action
Yesterday, General Motors CEO Rick Wagoner voiced his concerns over the federal government's lack of focus on the issues ailing the domestic auto industry. His talk came on the heals of a similar speech given by Mark Fields, President of FoMoCo, that aimed squarely at the contentious relationship between the auto industry and Washington leaders.
For those of you keeping count, the Bush administration has stood up GM, Ford and DaimlerChrysler, two, and by some accounts, three times for a sit-down discussion. Wagoner spoke to what has been perceived as a miscommunication regarding why the Big Two and a Half are seeking a dialogue with the U.S. government. The feds believe that automakers are looking for a bailout from their current financial woes, whereas in reality, a place that seems to be rarely visited by some in Washington, GM, Ford and DaimlerChrysler are looking for meaningful reforms to the rampant health care costs they're required to pay.
You want a staggering statistic? The General is the largest provider of health care here in the States. They spent over $5.3 billion for health care in 2005 and see an increase in 2009 to $7.4 billion. In just shy of three years, GM will be paying close to $7,000 a year for each employee's health benefits.
U.S. Rep. John Dingell from Dearborn summed it up best by saying, "Let's be honest -- this administration [has] done nothing for the auto industry except to whine that they want a bailout when the industry doesn't want a bailout,"
Click "Read" for the full article by the Detroit News.
[Source: DetNews.com]
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Reader Comments (Page 1 of 4)
Sam 8:13AM (8/12/2006)
GM, Ford, and Chrysler should all hope Bush doesn't "help." Everything else he has touched has gone belly up or gone in the crapper immediately, including his own history of businesses who were consistently bailed out by Daddy. Quite hypocritical for him to admonish them for seeking similar help. If they are seeking Bush for business management advice, the auto manufacturers will be lucky if Bush continues to avoid them. Maybe that's one thing he'll leave untarnished on his way out.
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motorman 8:23AM (8/12/2006)
GM got themseves in this position and there is no reason they should use my tax money to get them out. let the GM employees pickup their share of the costs. $15 million for viagra last year is insane
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Sleuter 8:49AM (8/12/2006)
No Motorman, our government placed all American industry into jeporady by forcing American workers to complete with 50 cent an hour workers in third world countries, no manufacturer can do that and survive. If the American public does not wake-up, stop blaming the hardworking American people, and place the blame where it belongs squarely on the backs of our elected officials that have sold our country down the river, we will dry up on the vine.
Nothing is done for the workers in this country it's all done for big business, and this administration is the sorriest bunch of thugs ever to occupy the white house. Bush and Cheney should be impeached and thrown in jail where they belong.
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Paulie the Pimp 8:50AM (8/12/2006)
The fact that Wagoner even thinks the gov should help bail out their mess is disturbing and shows he is incapable of being a CEO (thank god he's not fighting the war on terror..we'd all be dead by now). Is this what we have become? The government's purpose isn't to bail out businesses (even though the gov has started this dangerous trend). As stated above, GM, Ford, and Chysler brought these problems upon themselves by not paying attention to the market. Maybe GM and Ford need to replace their CEO and boards and try new management before looking for a handout.
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arnie 8:51AM (8/12/2006)
Interesting statistics. It just shows how important the big 2 1/2 are and how integrated they are into the "social fabric" (to use some revolting sociology jargon). These companies are not just businesses. They are fundamental institutions in US society. Maybe that's a part of their problem.
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Edsel 8:54AM (8/12/2006)
If GM is the largest provider of health care in the U.S. then they should have the biggest bully stick with which to negotiate better & cheaper healthcare for their employees.
If Government assumes responsibility of automaker's healthcare costs then we are half-way to a nationalized auto industry. Doesn't anyone remember what happened to the British auto industry?
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XiozTzu 8:57AM (8/12/2006)
Here is an even more staggering number. $192.60B that is GM's total revenue for 2005. Big f'n deal that they pay $7B for healthcare. That's just 4% of their revenue.
Give me a break!
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Paulie the Pimp 9:01AM (8/12/2006)
Sleuter,
I understand your position but please explain to me how and why Toyota and Honda are prospering when they are building factories here in the US and not in foriegn places (for US consumption)and yet they are doing well? Do you think that maybe Toy and Hon are doing well, still paying good wages, and selling their cars with out having to offer insane rebates because they don't offer benefits they can't afford and are much BETTER run companies?
over the decades, US auto management gave into union pressures to offer much more than they could afford to their workers knowing that it would crush the company in the future. CEO's and managment didn't care what deals they were making because they wouldn't be around to take the blame. Well, the chickens have come home to roost and now the auto industry has to deal with paying thru the nose of benefits to those no longer working. Thus, the problem you talk about, low wages in distant lands, has nothing to do with the problem plaguing Detroit. It's their mismanagement through the decades and poor products placement that has hurt them. You can't blame slave labor.
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bernie 9:11AM (8/12/2006)
I love it when rich Republicans run whining to their government asking then to unlevel the playing field. Nobody made them agree to pay union workers twice what they're worth. Nobody put a gun to their head and made them commit 3/4 of their resources to building gas guzzlers and to have no plan B if gas prices rose. I am appalled that Ford, Wagoner an Bob Lutz, earning millions, haven't been held accountable for their total failure of vision and leadership.
Toyota, Honda, Nissan and Hyundai are running successful global operations, and American enterprise has always let the strong survive and the stupid and ill-prepared die. Now that the strong are from other countries, we don't like it. Typical American thinking, and it's a joke.
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Paulie the Pimp 9:16AM (8/12/2006)
Uh Bernie, who exactly are the Rich Republicans running to the gov asking for help? Care to name them and show us their voting records to prove that they are republicans? I guess you have never been to Detroit. It's not quite the republican bastion you think it is. On the contrary, Detroit is one of the most staunch Democratic big cities in the country. And the dems have run it into the ground.
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Gardiner Westbound 9:17AM (8/12/2006)
Toyota and Honda's employee health care costs are similar to GM and Ford's. They're not looking to U.S. taxpayers for a bail out. They make quality cars people will buy at prices that throw off a profit.
German-owned Chrysler should look to that government for its bail out money.
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Tom 9:17AM (8/12/2006)
I blame big union. Being a baby boomer I watched as unions got larger and larger and demanded more and more from employers. The big 3 at the time were big enough to cave in to the demands and mortgage their future to do so. Those of us who didn't benefit should not have to repay the mortgage.
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robert bell 9:19AM (8/12/2006)
Assumption of employee health care costs, which were negotiated over time with the UAW, is only one reason U.S. car companies have fallen behind.
At some point, management has to accept responsibility for mistakes in product planning and lack of re-engineering of their business model. Why no U. S.company has a small fuel efficient vehicle available as part of its model array should tell us all we need to know about the shortsightedness and short term thinking of management. Building trucks and SUVS made sense with cheap gas, but to not have any fuel efficient models readily available or on the drawing board shows the myopia of Detroit and the lack of any rational contingency planning. It is like going to war with only nuclear weapons in your arsenal. Tough to fight house to house.
By the way, all of you who bemoan the abandonment of the "U.S. labor force" by our government; how many of you are driving Toyotas, Hondas and Hyundais? You abandoned Detroit for a simple reason. It was in your best interest.
When we begin to assign blame for the death of Detroit, we all need to look in the mirror as well as point fingers. There is more than enough blame to go around on this one.
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Ryan H 9:27AM (8/12/2006)
This seems like a great example of something about a pot...and a kettle...and the color black.
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Kuroshi 9:31AM (8/12/2006)
As you mention Toyota factories here, don't forget that most Toyota's are till made in Japan and most of it's workforce is still there. Toyota is not under the same burden of healthcare that GM is. The solution you are offering is that GM stop paying great benefits or just shut down american factories and build them overseas, we do have NAFTA after all. The U.S. economy is powered by the spending of it's workforce. If you cut the spending power of one of the largest employee bases, that will be felt by the overall economy. The Government "bailed out" the Airline industry and even the oil industry who now have record profits at the expense of us all. Why not the auto industry? Bush's politics are for sale and they didn't buy. The auto Unions stood against him, while the oil and airline industries are some of his biggest paid supporters. Waggoner sucks but that doesn't mean that the healthcare and fuel cost aren't a problem
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Sleuter 9:42AM (8/12/2006)
Paulie the Pimp
Paulie the Japanese government subsidizes the Japanese auto industries healthcare so the companies do not have the burden of healthcare cost. That is why Toyota and Honda have much lower overhead cost per car than GM and Ford. The US Auto industry is not asking for a bailout, what they are asking for is that the government get a handle on rising healthcare cost. The parmacutical industry has been robbing the American public for years with the help of our elected officials and lobbiest. Look no further than Canada where the same drugs made and sold in the US are half the price. Our government is selling your future every day, as the Chinese and Japanese make further gains, and the trade deficit balloons. Soon that balloon will burst and so will our future as a world super power. A country with no heavy industry will not survive very long.
Sure Toyota, Honda and other japanese and Korean companies build plants in the US, but 2/3's of their profits go back to Japan and their home countries, boosting their economies.
The Japanese are very patroitic when it comes to purchasing only products of Japanese origin, unlike Americans that buy foreign products and contantly critize fellow Americans because they want a decent wage and better life.
Those of you that as of yet are unaffected by this looming disaster are simply waiting in line for your turn, an make no mistake, it will come. When America no longer manufactures anything to sell and becomes nothing more than a service economy we will have lost the race.
It is not hard to understand,....."American workers cannot compete with workers making $1.50 an hour, not even the American workers making $8.00 and no healthcare benifits". Is it so hard to see that American workers are not asking for a handout, only a fair chance to compete.
Someone above posted the
auto companies wanted the government to unlevel the playing field, that is the most rediculous statement I have heard in a while, and if that poster actually believes that he or she has a hard roe to hoe.
Sorry for being so long, but I am very passionate about this subject, the very future of our country depend on the health of our Auto Industry. Wake up America while you still have a place to lay your head.
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Gavin 9:46AM (8/12/2006)
You’re absolutely right about the chickens, Bernie! Back in the 50’s the President of GM said “what’s good for General Motors is good for the country” and then began replacing a perfectly good (if not wonderful) urban and interurban rail system with busses that clogged our streets and fouled our air. This is an example of the short term thinking that union, industry and political leaders in this country are guilty of. If we don’t start looking beyond our noses we’re going to end up a second rate economy, if we aren’t already. Its time to find solutions before economics force them on us.
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Richard Warren 9:53AM (8/12/2006)
Missing the point guys. The real problem is the out of control healthcare and healthcare insurance industry. The new players here do not have the legacy costs involved as they have a younger workforce and they also employ a smaller number of workers. In their home countries there healthcare costs are covered by govenment health plans.
As to that 4% of revenue, do you pay your own healthcare? 4% is pretty low, in comparison my healthcare insurance(out of pocket myself) runs about 12% of revenue, so they are getting a pretty good deal.
As to this administration, hey, it never hurts to talk and have an exchange of ideas and who's to say it's a bailout. If you go back to the Chrysler loan, we as taxpayers made money on that, same for the Lockheed loan. They both paid back the loans, with interest.
One thing is for sure, healthcare costs in this country need to be looked at.
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Steven T. 10:10AM (8/12/2006)
This thread has a lot of heated rhetoric that dances around the underlying policy issues.
For those who have studied healthcare policy, I don't think it is terribly controversial to argue that some reforms are needed. The U.S. has the highest costs per worker in the world, and they tend to escalate much faster than inflation. The big question is what type of reform would be most useful. Here is where partisan differences can be stark, e.g., the Bush administration's focus has been on giving the worker a much larger share of the cost and risk (e.g., by replacing guaranteed benefit plans with healthcare savings accounts).
The above approach goes in the opposite direction of virtually every other industrialized nation with significant automotive manufacturing operations, where some form of nationalized healthcare is the norm. In Japan, for example, this shifts healthcare costs from the manufacturer to the government.
So as long as a given vehicle is built in Japan rather than the U.S., Honda or Toyota will have a built-in price advantage. Of course, as foreign automakers build more of their cars on American soil that advantage will decrease. And when going that direction, foreign automakers have tended to offer less rich benefit packages, which is easier to do because they aren't negotiating with unions. However, before launching an attack against the UAW you might wish to take a careful look at these healthcare benefits and ask yourself whether YOU would find them acceptable.
In the end, I suspect that GM and Ford may be crying wolf a bit too loudly regarding the impact of healthcare on their bottom line. And even if the Bush administration managed to get healthcare legislation passed next year, I doubt that would make more than incremental changes in their costs. Detroit needs to find a way to engage the UAW in more substantive reform that improves healthcare efficiency and effectiveness without dumping all of the added risks onto the worker. That will require GM and Ford to do a much better job of negotiating than it has apparently been able and willing to do in the past. The same goes for the UAW.
This is a policy issue that has much wider repercussions than the future of American automakers. Let's hope they and the UAW show forward thinking in their next steps.
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Finished.Law.School 10:18AM (8/12/2006)
GM and Ford have the UAW to thank for their current situation. And where the UAW is not responsible you have idiot executives making stupid decisions resulting in ugly cars with crap reputations regarding quality and otherwise.
Bailing them out in any fashion does nothing to give them incentive to make improvements. And the sole reason that these losers are unable to admit to that is because they do not want to change nor do they want to improve themselves and their product.
If you do not believe me just wait until the UAW contracts expire in 2007. The UAW will strike and likely sabotage all sorts of production aspects all in attempts to get paid more which is ridiculous considering their low productivity and usefulness as it is.
I do not want my tax dollars wasted these assholes.
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