Health benefits for retirees are a big part of this equation. How many employers could afford to pay for full health care benefits for retired workers? After all, the retired workers aren’t contributing anything towards the bottom line of these companies except in a negative way. Several American steel companies ended up going out of business because they had to pay for similar benefit packages for their retirees. Foreign companies aren’t saddled with the same sort of obligations, which is why they are more competitive.
However, regardless of why the auto makers are in trouble, it is not the taxpayers’ responsibility to bail them out. And if we do bail them out, which industry will step forward next for handouts? Corporate welfare is just as bad as welfare payments to individuals.
Agreed.
And it's also not our responsibility to bail out risky loan makers and derivative gamblers.
No automaker bailout? Then rescind the AIG/FM/FM/banking bailouts. Now.
Government is the only one that can "afford" health care and retirement for its employees.
The public sector will have to work harder then ever before to pay for public servants to have great health, live long and prosper, and retire at 50.
“Health benefits for retirees are a big part of this equation. How many employers could afford to pay for full health care benefits for retired workers? After all, the retired workers aren’t contributing anything towards the bottom line of these companies except in a negative way. Several American steel companies ended up going out of business because they had to pay for similar benefit packages for their retirees. Foreign companies aren’t saddled with the same sort of obligations, which is why they are more competitive”
It’s also worth noting that NONE of the foreign automakers currently operating plants here in the U.S.A. have a large cohort of retirees yet. That means that they are operating without the “legacy costs” that the Detroit automakers must carry.
Also worth noting is that the foreign automakers’ work forces are probably younger [on average] than the Big Threes’ - meaning that health care costs for _active_ employees is low, as well.
I wonder how the Japanese makers will eventually deal with the problems of “legacy costs”. Might they reach a point where it becomes cheaper for them to close their plants in the United States, move them lock, stock and barrell to China, and produce their vehicles there?
Having said all that, it’s obvious that the overstuffed benefits for retired UAW workers can’t be continued as-is for much longer - and still harbor the expectation that their [former] employers will survive.
- John