Death Of An Automaker

 

1. Poor General Motor’s shareholders.  Read the whole story from USA Today, it gets sad.  It continues:  Even if GM were to change its generous benefits and make them more like the American corporate norm, the savings would be a one-time thing, says Len Nichols, director of the health policy program at the New America Foundation, a non-profit, non-partisan think tank in Washington, D.C. Those savings would be quickly eaten up by the rising costs of medical care.

   This article dribbles on with a confused way to fix heath care by Len.  Then it says that nobody cares about Socializing Medicine real quick for General Motors and the UAW.  The administration’s reform is centered on uninsured Americans and expansion of Health Savings Accounts (HSA).

   Get ready America.  Next GM and the UAW will want to shed their retirement health care liabilities, untold tens of billions, onto the backs of tax payers.  Medicare for tax payers isn’t as rich as retired golfing UAW employees’ benefits.  Why would tax payers pick up the cost of some promise, some company made to some employee?  I don’t know, but I would like to know if these sun-tanned golfing retired GM employees are getting basically free Viagra?  That would be a slap in the face of tax payers if they had to pick up that tab too.

   Posted by Z Woof       06/24/2005  at  05:00 PM  



2. Z: not only that but consider this .... the recent Supreme Court ruling that cities could snatch land if they wanted to involved the town of New England, CT and the reason they wanted to snatch the land was to make the town much nicer for its major employer, who happens to be .... (drum roll) .... Pfizer and (are you ready for this?) guess who makes viagra? Yup, you guessed. It all comes full circle.

   The UAW retirees get free viagra from happy Pfizer employees who are playing golf on snatched land. Are we having fun yet?

   GRRRRRRRRRRRRRR

   Posted by The Skipper       06/24/2005  at  05:13 PM  



3. ”The UAW is on course to kill GM. That’s not good for GM and surely not good for America.”

   One thing if for sure, once GM is dead, not one of it’s future former workers gets to keep salary, benefits or nothing.
   That’s good thinking, UAW. Profound thinking. Thanks, stupids.

   Posted by Mile66       06/24/2005  at  06:25 PM  



4. Not sure how reducing health care costs for GM could be a “one-time thing.” Once the percentage of health care costs that the company is paying are reduced, they will stay that way. 
   If the cost of health insurance per car was reduced to $500, even, GM, and the others would sell more.
   No way the UAW will let that happen.
   They would rather see GM, then Ford, then Chrysler collapse, then cry to the Government that nasty big business stole their future.
   UAW in particular, and old-line unions in general, have never gotten past the communist-inspired class war rhetoric they were based on.  Factor in the gravy train for the union “officials,” woh fear that any cut will get them unelected (if not shot) and the future looks grim for not only the automakers, but for all unionized heavy industries in the US

   Posted by Siddhartha Vicious       06/24/2005  at  08:24 PM  



5. Labor unions persist in killing the geese that lay the golden eggs.  They will have only themselves to blame when they are reduced to soup lines.

   Except for their so-called “management,” of course, who make out like bandits, in the gunpowder-scented tradition of successful socialists everywhere.

   The average union stiff may find himself out of his benefits, but rest assured that the top dogs have already made other arrangements “just in case.”

   

   Posted by Tannenberg       06/24/2005  at  11:21 PM  



6. I’m struggling with mixed emotions on this one. Full disclosure: my father was a UAW member and later an official on the local and regional level. He continued serving the union after his retirement, organizing retiree functions and seeing to benefits. Walter Reuther was his idol. My two brothers are UAW members, one is a benefits rep and both work for GM. I have never been a member of any union.

   I believe that any company or industry that has a union has done something to deserve it. Look into the history of union organization in the auto industry. Investigate the abuses that were occuring industry wide which caused the workers to organize. Did you know that Henry Ford sent his “security” forces (thugs) to employees homes to ensure that they were living the way he thought they should? (No alcohol or tobacco use, for example) Did you know that the Ford “security” types killed Reuther’s brother as well as others? See also the history of formation of the Mine Worker’s Union. There’s an education there.

   I have worked for companies that unions attempted to organize and the employees ran them off. When people are treated decently and make a good living they won’t organize. I assure you.

   Yep, the UAW got some good great benefits over the years. Sometimes it reached the point of the ridiculous. I watched it from near the inside. I also have visited a lot of unionized plants when I was doing machine tool service and had to deal with various levels of obstructionism from workers enforcing shop rules. e.g. I had to have a worker from every job skill I was infringing on present before I could work on the machine. Usually I’d work with one of them while the rest sat on their toolboxes and read crotch novels, but they had to be represented if I was working in their specialty. The half hour wait for an pipe fitter to show up before I could connect a hose to an indexer would really piss me off. I chose not to work in that type of environment.

   The unions have paid for this in the last two decades with layoffs, reductions in work force, plant closures and having their noses held to the grindstone on quality. Facilities have to compete with each other within the companies and with outside suppliers to keep their work.

   I can also assure you that most of the older plants are holes and cesspits, the working conditions are atrocious and anybody who works in an auto industry foundry has earned retirement after twenty years. If they survive the experience, that is.

   On the other hand my mother received the benefits of a very good retiree survivor’s health program when she underwent heart bypass surgery and a heart valve replacement. Had this not been available she would have died eight years ago. Do you think she’d have gotten the same level of life saving measures from medicare? I don’t.

   The competition is here, now. Asian and European auto factories are producing automobiles all over the country. I worked for one of their suppliers for a while. Air conditioned factory and the latest technology available. No unions, pay and benefits almost as good as the UAW gets. They’re competing on price and quality. They are intensely invested in continuous improvement and will spend freely to obtain it. U.S. companies aren’t nearly as invested in this concept.

   Their advantage is that all of their facilities are new and incorporate the latest advances in automation. There were more robots than people on any given shift where I worked. I know because I serviced the robots. The U.S. auto industry is still running factories almost 100 years old, in some cases. I think Ford is still running the River Rouge complex. A modern wonder when it was completed in 1927.

   The problems with U.S. auto manufacturing are much deeper than union benefits. The UAW will resist, as they have in the past, but they will accept that their livelihood is dependent on the well-being of the companies they work for. They’ve done it before when the first “foreign invasion” occurred and many were laid off for years.

   U.S. auto manufacturing needs to be updated to modern methods. Some are doing it to an extent, but the capital expenditures needed to replace many of their long outmoded facilities is enormous. Their management hierarchy seems entrenched in the past and are determined to blame someone else for their inaction and hubris. They have been wildly profitable for generations and failed to invest sufficiently in their own production infrastructure.

   Don’t forget that the same people who said “what’s good for GM is good for America” were the same folks who quietly bought up trolley and bus lines in many cities and scrapped them to force encourage people to buy automobiles.

   The machine tool industry took some very bad hits when the same foreign competition got here in earnest in the late 1970’s. Those that didn’t adapt and act quickly to modernize got swept under by the tide and disappeared or were bought out. Look at LeBlond for a prime example. Their facilities were old (I’ve been in the plant several times) and they were unable to update them quickly enough to compete and ended up a subsidiary of Makino. Their’s was a success story compared to many others.

   Daimler Chrysler is also another example of the possibilites awaiting us in the future. Remember that Daimler in Germany is also heavilly unionized.

   As to the mixed emotions: On one hand I realize that had I started with GM when I got out of the Navy I could be looking at enjoying a comfortable retirement now rather than being out of work and worrying about the chest pains that I can’t afford to have diagnosed. On the other hand, I’ve been a lot of places and gotten to do my work without hinderance by some backstabbing who wants to get a paycheck without working for it. That stress and strain might have caused me a lot of trouble.

   The impending problems with GM cannot be entirely laid at the door of the UAW. GM had a greater hand in it. Don’t forget that the “big 3” are all operating under the same contract.

   Posted by StinKerr       06/25/2005  at  12:04 AM  



7. FOX News Spew: House votes NO FREE Viagra in Medicaid or Medicare.  Conservative Republican Representative Steve King saves tax payers billions.  King replaced far left Liberal RINO Greg Ganske who jumped ship and co-sponcered the Democrat’s so-called Patient Bill of Rights with Michigan’s Dingle (D-MI).  Unreported by the media but that bill would have sunset and outlawed further tax free MSAs (now HSAs) enrollments.  So he had to go.  Conservative King is new bright light of reason in a Congress run amuk.

   It costs $34 an hour for an American UAW worker with benefits. The St. Petersburg Times is reporting today that Chinese auto workers make $100 a month along the coastal regions and only $50 a month inland.  GM CEO Wagner should listen to Representative King and at least follow the Federal Government and quit giving Viagra away to UAW seniors, if he is.

   Also, their advertising really sucks.  GM is buying full page ads in the St. Pete’s Times with a little “award” from J. P. Powers in the middle, its an ugly ad.  Mostly empty space for an over-priced spot in a Liberal newspaper.  My wife said, “At least they can’t be targeted as using too much sex to sell cars.” Newspapers are the biggest waiste of trees in America.

   Siddhartha:  It’s pure math.  No matter what GM does there will be double digit increases in their health insurance costs.  If the $6 billion per year is reduced by 20% to only $4.8 billion; in 6 years GM’s cost is up to $9.6 billion annually anyway, and still expanding.  GM’s CEO Wagner has but one hope and that is to pull the sword from the stone.  He needs to sell everybody on GM switching to a “Defined Contribution” (DC) in health care benefits, that can go up a sustainable persentage each year, a predictable number, so that the company can plan for the future again.  Wagner has options for those over 65 that Medicare serves.  The tax payer will play a bigger roll I’m sure.  He could sell some UAW seniors to choose a tax free HSA, so all GM funds were deposited, tax free, into the senior’s account.  The retired worker would love that.

   I’m knee deep in retired GM employees here in Tampa.  Also, here in Tampa Medicare HMO’s advertise that Medicare pays so much here that any senior can sign on the bottom line and the HMO will pay their Medicare Part B premium, $78 a month that comes out of their Social Security check, FREE enrollment, FREE monthly premiums, plus discounted health club memberships and includes Rx, I hoze you not.  For the sake of round umbers let’s say the government pays $1,000 a month, per senior, or $24,000 per couple annually, to the HMO.  Wagner must say, “Pay attention, this is for your own good.  You should join the Medicare “Medicare Savings Account” program.  Instead of the government giving $24,000 a year to the HMO the Treasury Department gives it to you, tax free, in your HSA.  Then you, in a free and open market, like the way we like to do things here in America, can pick and choose your private insurance carrier, with a higher deductible that costs less, say a $6,000 deductible only cost $20,000, you keep the over-payment of $4,000, from the feds, in your HSA.

   Then, GM deposits say, another $4,000 per couple, per year, in your HSA that you can either save or spend.  Let me recap, your deductible is $6,000 paid by the government’s Medicare program.  Their over-payment of $4,000 combined with GMs HSA deposit gives you $8,000 a year, all tax free, that you can put in the bank, FDIC insured, or invest in mutual funds for tax free growth.  I know that GM dropping their costs all the way down to just $4,000 per year, per couple, would be like magic to our bottom line and a major coup, but that’s typical with these HSAs, gift from heaven.  You should really concentrate on the $8,000 annually, deposits going up say, 3% per year, I think that’s pretty generous, with historical rates of returns in the last 50 years in mutual funds, say 7 1/2%, and in 20 years you could have a mountain of tax free money.

   Of course if the old auto worker lives in Kalamazoo, everything changes.

   The HMOs will fight Wagner tooth and nail about his HSA plans to save GM.  They will say something stoopid like, “It’s like paying people $8,000 a year, tax free, not to join an HMO!!!” Then CEO Wagner should counter, “So, what’s wrong with that?”

   Posted by Z Woof       06/25/2005  at  09:52 AM  



8. Some things go up faster than others.  In 1973 I bought a new Camero for $2,800.  Also, in 1973 Grandpa would lay in the hospital for 7 days and then die, and the bill was $900.

   A new Camero today is about 10 times 1973 costs.

   But the cost for grandpa’s death is much higher.  Today, grandpa won’t die in 7 days, it will take 38 days, and the bill is $194,000. 

   In automoble talk: 

   In 1973 death cost about 30% of 1 Camero.

   Today, death costs a whopping 7.8 Cameros.

   In 2027: Projected death cost is 176 Cameros!!!  Remember, Cameros will cost 10 times more than today, or about $250,000 each.  That’s $44 million per old dead person.

   Just extend the trend lines OCM.  The sooner you die the cheaper it will be for everybody.  Die in your sleep, that’s really cheap.

   Posted by Z Woof       06/25/2005  at  11:22 AM  



9. Correction OCM:  Math suks!!  The 2027 projection is corrected to a 2037 projection of death costs. Baby Boomers were born between 1946 - 1964, so they will be 74 to 92 years old. 

   I saw a bill from 1972 from the Mayo Clinic for $50 a day.  Here in Florida we have a guy sueing the hospital because they charged him $13,000 a day.  He was uninsured and the hospital’s most common charge for insured clients was less.  So these numbers bounce around a lot but they are always going up.

   I’m still waiting for you to tell me how much the auto worker would have in his Medicare Savings Account with $8,000 a year deposits, growing by 3%, invested in mutual funds, with 7 1/2% growth over 20 years.  Remember, GM CEO Wagner can’t get people to opt for this option, and save the company, if he doesn’t have this number.

   Posted by Z Woof       06/26/2005  at  07:56 AM  

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