| May 23, 2006
Japanese car companies are not letting health costs for retirees bankrupt them.
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General Motors is now a health care provider for its retirees and employees, sponsored by selling cars and trucks.
GM and the UAW worked together to get us into that mess during the good cash years of the last century. It doesn’t work now.
Offering subsidised health care & shares to employees benefit companies in the end as they don’t have to handle retirement costs. One way of telling employees to pick a portion of the tab and invest for their future. Good strategy indeed that wouldn’t hurt businesses once these retirees hit age limit.
Health care and so-called “legacy costs” are NOT bankrupting General Motors. General Motors is. If General Motors can’t design, engineer, and market a car that consumers want to buy, they put all of their employees in financial peril.
Why are Toyota and other foreign manufacturers selling their cars like hot cakes? Because they also know how to market and advertise an emotional purchase!
My observations as a marketing professional in the Detroit area make me worry about the industry. The GM executives, fat bonuses in hand, work with advertising agencies that operate and innovate like they are advertising George Jetson in the 1950’s. Their “product” would make me laugh it didn’t make me cry.
Yes, retiree benefits are very generous. But GM has no one to blame but themselves for the financial condition of their firm and Delphi.
GM employees and retirees have been reported to be ” outraged ! ” that they now have to pay a co-pay when getting medical/dental care.
The UAW was smart enough to get GM to cover all medical (+ dental ?) expenses in the past. GM went along, as long as selling vehicles covered the cost.
What other employees/dying retirees have such lavish health care? Other than Congress.
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