“3. Legacy Costs”
...when the Japanese started building plants here they could hire young workers who were healthy...some of them are getting older now....others will be eligible to retire in a decade or so...eventually they’re going to encounter the legacy costs of an aging workforce themselves.
It depends what kind of retirement benefits you provide. If it’s an open-ended commitment to keep raising retirement pay forever, and these guarantees are unfunded, then one way or another you’ll run into trouble.
If it’s vested in the workers, then it’s THEIR responsibility to save up for retirement.
Having said that, I don’t know what kind of commitments Toyota is making. But I suspect they have a lot better sense.
Nope. They built their factories in free to work states and put everyone on 401Ks. They wont have the same legacy costs.
Their legacy costs will be much smaller than the Big 3's costs. They do not promise the pensions and retiree health care. The health care costs for workers will increase as workers age but workers can be asked to contribute more also. The big money is in the pensions and retiree health care.