It’s not news, especially to car enthusiasts, that the Big Three domestics have large expenses due to the number of retirees they must support (“legacy costs”). General Motors, for instance, adds an additional $1600 per vehicle while Ford adds around $1000 per vehicle.
The issue, however, becomes more apparent when each company's overseas operation is considered. Many foreign governments provide universal healthcare coverage, so the Big Two plus DCX do not have to shoulder such a heavy financial burden elsewhere around the world. Instead each company usually contributes to a government-sponsored retirement fund. In Mexico, for instance, Ford pays around $500 a year for an assembly worker’s retirement. More importantly Ford stops contributing once the employee retires; the government covers the pension and medical costs at that point. While Autoblog doesn't take a stance either way on whether or not the U.S. should have universal healthcare, it's a fact that it doesn't. Thus, as this article in the Los Angeles Times points out, foreign automakers setting up shop in the U.S. will also have to deal with the cost of growing older as more of their employees approach retirement age. Perhaps then the playing field will level and instead of our domestic automakers complaining about high legacy costs, we consumers will be complaining about the exhorbitant cost of all vehicles.
An interesting note: despite each company's dismal fiscal performance at home in 2005, GM posted a $300-million profit abroad last year while Ford raked in $415-million.
The issue, however, becomes more apparent when each company's overseas operation is considered. Many foreign governments provide universal healthcare coverage, so the Big Two plus DCX do not have to shoulder such a heavy financial burden elsewhere around the world. Instead each company usually contributes to a government-sponsored retirement fund. In Mexico, for instance, Ford pays around $500 a year for an assembly worker’s retirement. More importantly Ford stops contributing once the employee retires; the government covers the pension and medical costs at that point. While Autoblog doesn't take a stance either way on whether or not the U.S. should have universal healthcare, it's a fact that it doesn't. Thus, as this article in the Los Angeles Times points out, foreign automakers setting up shop in the U.S. will also have to deal with the cost of growing older as more of their employees approach retirement age. Perhaps then the playing field will level and instead of our domestic automakers complaining about high legacy costs, we consumers will be complaining about the exhorbitant cost of all vehicles.
An interesting note: despite each company's dismal fiscal performance at home in 2005, GM posted a $300-million profit abroad last year while Ford raked in $415-million.
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