Autoblog http://www.autoblog.com Autoblog http://www.blogsmithmedia.com/www.autoblog.com/media/feedlogo.gif Autoblog http://www.autoblog.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Explaining the burden of "legacy costs"]]>http://www.autoblog.com/2006/09/20/explaining-the-burden-of-legacy-costs/http://www.autoblog.com/2006/09/20/explaining-the-burden-of-legacy-costs/http://www.autoblog.com/2006/09/20/explaining-the-burden-of-legacy-costs/#commentsFiled under: , ,

With all the discussion about the domestic automakers' future lately, a few of our readers have left comments requesting some additional background on the situation; primarily, the history of the oft-touted "legacy costs" and how they affect the Big 3's survival.

The legacy costs have their roots in the concept of "cradle-to-grave" care provided to industrial workers by their lifelong employers. Such a system utilized employer-funded pensions to provide retirement income and catastrophic injury coverage for employees, and also ensured workers that they would receive a high level of health care coverage upon retirement. This arrangement minimized the burden on government-funded social security programs and provided significant incentive for loyalty on behalf of the employee, but also depended on steady growth within the manufacturing sector - an assumption that, as we now see all too clearly, turned out to be wrong.

Follow the jump for a breakdown on what automakers could do to address the burden of legacy costs and what they actually are doing.

Continue reading Explaining the burden of "legacy costs"

Explaining the burden of "legacy costs" originally appeared on Autoblog on Wed, 20 Sep 2006 15:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>ask autoblogAskAutoblogcommentarycostsfixed costshealth carelegacypensionsWed, 20 Sep 2006 15:00:00 EST http://www.autoblog.com/feed/671289/article-comments.xml http://www.autoblog.com/feed/2006/09/20/explaining-the-burden-of-legacy-costs/671289/article-detail.xml 671289 http://www.blogcdn.com/www.autoblog.com/media/2006/09/money_exchange_thumbnail.jpg http://www.blogcdn.com/www.autoblog.com/media/2006/09/money_exchange.jpg -1 2