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When General Motors sneezes ...

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Star Tribune Story


Editorial: When General Motors sneezes ...
Detroit's health-care costs are symptoms of a bigger problem.
Last update: November 28, 2005 at 5:54 PM

Like many Americans, Barack Obama was stunned last week when General Motors announced plans to lay off a quarter of its manufacturing workforce -- some 30,000 people -- and shutter a dozen North American factories by 2008.

But Obama, a Democratic senator from Illinois, was in a position to do something about the latest sign of U.S. industrial meltdown. He has introduced legislation that would relieve American automakers of part of their retiree health-care costs if, in exchange, they promise to invest a portion of their savings in production of fuel-efficient vehicles.

We have misgivings about the details of Obama's plan. But if it sparks a conversation about the cost of health care and American competitiveness in a global economy, that's progress.

The swap that Obama proposes is attractive, but it could send some bad signals. It seems to cushion Detroit from a series of management mistakes over the last decade -- specifically, its sustained bet on gas-guzzling SUVs. In effect, it punishes rivals such as Toyota for having the foresight and initiative to develop hybrids and other fuel-saving cars. Finally, it raises dangerous issues of precedent: Should the government bail out other old-line companies, such as IBM or AT&T, that have hefty retiree costs?

That said, Obama is onto something important about health care costs in the United States and the way they are crippling the competitiveness of American industry. Hefty insurance premiums certainly aren't the only reason why Detroit's Big Three have struggled. But they can't be ignored. By one estimate, employee health insurance costs General Motors $1,400 per car, more than steel or engineering. The figure at Toyota, by contrast, is something like $200 per car.

Because the United States, alone among advanced nations, has chosen to link health insurance to the workplace, it has also imposed a business cost that is no longer sustainable in a global economy. It's not just that taxpayers pick up part or all of the bill in Japan, Britain, Germany, France, Australia, Taiwan and other developed nations, lifting part of the expense off business. It's that these nations, by streamlining administrative costs and creating universal coverage pools, have also achieved vastly lower costs. Americans spent $5,274 per person on health care in 2002, according to the World Health Organization. The comparable figure in Canada was $2,931. In Germany it was $2,817. In Australia, $2,699 and in Japan, $2,133. All these countries, by the way, had better overall health indicators than the United States.

Thirty years ago the expense of health care was an afterthought in world economic competition, a field where American companies enjoyed the advantages of light regulation, a low cost of capital, a flexible workforce and constant innovation. As the industrial giants stumble and the ranks of the uninsured climb, however, it is an afterthought no more.
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i just read that in the paper at lunch at BK chowing on a whopper........a surprisingly fair article from the strib, although i do not like the assumed claim they make of other countries having superior health care setups.
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"It seems to cushion Detroit from a series of management mistakes over the last decade -- specifically, its sustained bet on gas-guzzling SUVs. In effect, it punishes rivals such as Toyota for having the foresight and initiative to develop hybrids and other fuel-saving cars."

I can't see how either of thse would be true.

Better overall health indicators probably go a long way to explaining lower heath-care costs. The rest is because of chronic under-funding, not genuine "lower costs". The public health systems in the UK and Australia are a perennial source of political unrest, scandal, and pork. Governments have been known to "punish" sections of the electorate by closing services. The wait for non-emergency surgery can take years unless you pay as a "private" patient, and the gap between public cover and basic private costs such as a checkup is increasing all the time.
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Since they reference Germany perhaps this is relevant: "Medical workers at Europe's largest university hospital, Charite in Berlin, Germany, are on a weeklong strike to protest pay cuts and unpaid overtime."
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I don't think gov't-run healthcare is the answer. I think a couple of things could help:

1. Discouple healthcare from businesses. As much as *I HATE* the thought of businesses shifting the burden from themselves to individuals (a la pensions -> 401k), you'd have to admit that if people had to shop-themselves around they'd take a little bit better care of themselves and they'd pay closer attention to the cost; forcing ins. companies to be a bit more competitive. This means I won't get to open the financial page of the Mpls. Star & Tribune business section and find that 5 of the United Healthcare executives made the Minnesota's top-10 for executive compensation. That's absurd.

2. Curb profits at the drug companies and at healthcare companies. This is no different than what the government does with utilities companies. When a utility company needs to raise rates, it must make a business case to do so. It opens it's books and has to petition the gov't to raise it's rates. If drug companies and healthcare companies did the same, perhaps we wouldn't have the runaway profiteering we do now. Quick factiod. Q: Since the great depression, what business sector has enjoyed gains each and every year. This business sector has outperformed every other business sector in the economy each and every year for the past 35 years. A: Pharmaceuticals. Now you know where to put your money boys and girls.

If you really wanted to look at growing the economy, I think you could probably extend thought #2 to include oil/energy companies as well. What good isn't transported into and around this country? Our basic cost of living is soo tied to energy costs, it isn't even funny. If energy profits were curbed (meaning oil/energy were even cheaper) the consumers spending ability would rise. And if you really wanted to bring up people's spending power, you'd index a companies average pay to their executive pay -> meaning the executive's pay couldn't exceed the average pay in the company by some sort of ratio. I don't think that would limit an executive's pay so much that it would rise pay levels, limit company profit/share-holder return. Shareholders would have to get used to the idea that businesses cannot sustain their "this-quarter is only 5% better than last quarter and we need to see never ending double-digit gains mentality". Personally, I think that one's a bit over-the-top, but I'd be curious to see where things would be if we had that in place for a while..
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I don't think gov't-run healthcare is the answer.  I think a couple of things could help:

1. Discouple healthcare from businesses.  As much as *I HATE* the thought of businesses shifting the burden from themselves to individuals (a la pensions -> 401k), you'd have to admit that if people had to shop-themselves around they'd take a little bit better care of themselves and they'd pay closer attention to the cost; forcing ins. companies to be a bit more competitive.  This means I won't get to open the financial page of the Mpls. Star & Tribune business section and find that 5 of the United Healthcare executives made the Minnesota's top-10 for executive compensation.  That's absurd.

2. Curb profits at the drug companies and at healthcare companies.  This is no different than what the government does with utilities companies.  When a utility company needs to raise rates, it must make a business case to do so.  It opens it's books and has to petition the gov't to raise it's rates.  If drug companies and healthcare companies did the same, perhaps we wouldn't have the runaway profiteering we do now.  Quick factiod.  Q: Since the great depression, what business sector has enjoyed gains each and every year.  This business sector has outperformed every other business sector in the economy each and every year for the past 35 years.  A: Pharmaceuticals.  Now you know where to put your money boys and girls.

If you really wanted to look at growing the economy, I think you could probably extend thought #2 to include oil/energy companies as well.  What good isn't transported into and around this country?  Our basic cost of living is soo tied to energy costs, it isn't even funny.  If energy profits were curbed (meaning oil/energy were even cheaper) the consumers spending ability would rise.  And if you really wanted to bring up people's spending power, you'd index a companies average pay to their executive pay -> meaning the executive's pay couldn't exceed the average pay in the company by some sort of ratio.  I don't think that would limit an executive's pay so much that it would rise pay levels, limit company profit/share-holder return.  Shareholders would have to get used to the idea that businesses cannot sustain their "this-quarter is only 5% better than last quarter and we need to see never ending double-digit gains mentality". Personally, I think that one's a bit over-the-top, but I'd be curious to see where things would be if we had that in place for a while..

[post="50145"]<{POST_SNAPBACK}>[/post]


Ideally, I look forward to your suggestions coming to pass. In reality, however, greed goes a long way to screw up the quality of life of those who are not in power.

Lobbyists will pay off the governments to keep healthcare private. The government just got more money, and keeps healthcare private, which makes the industry more money. The Government wins. The Healthcare Industry wins. Guess who loses.
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Government run anything is never the answer to any problem. The US government bungles everything, just look at social security, social welfare, and medicare.
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[quote]Like many Americans, Barack Obama was stunned last week when General Motors announced plans to lay off a quarter of its manufacturing workforce -- some 30,000 people -- and shutter a dozen North American factories by 2008.[/quote]

This perfectly sums up how IGNORANT most americans are...

Seriously.... Has this guy not watched the news in a few YEARS?!?!?!?

[quote]But Obama, a Democratic senator from Illinois,[/quote]

And that makes my statement above all the more priceless.

[quote]was in a position to do something about the latest sign of U.S. industrial meltdown. He has introduced legislation that would relieve American automakers of part of their retiree health-care costs if, in exchange, they promise to invest a portion of their savings in production of fuel-efficient vehicles.[/quote]

Depends.... Will these "fuel efficient vehicles" make money for GM, or be a perpetual loss like all hybrids of the world now?

[quote]It seems to cushion Detroit from a series of management mistakes over the last decade -- specifically, its sustained bet on gas-guzzling SUVs.[/quote]

I don't see why all in the media think this was such a HUGE mistake... Wall Street certainly enjoyed the record profits, consumers obviously like these vehicles and GM paid it's healthcare and pension... Seems like a pretty smart move to me..

Sure, GM should not have abandoned the car side of the business BUT, if the only way the company can make money because of legacy costs is to invest in a part of the market that is unpopular with media zealots and all the new found self righteous 'oil saver' analysts and public schmoes, then so be it...

GM's job is to make money, not satisfy personal agendas from starving journalists or trend of the week fat cat analysts... and they chose the right path to do so. GOOD business move IMO.


[quote]In effect, it punishes rivals such as Toyota for having the foresight and initiative to develop hybrids and other fuel-saving cars.[/quote]

(Another Toyota humper :rolleyes:)

Oh well....

Toyota didn't build this economy.... Toyota isn't supporting thousand of american pensions and Toyota isn't employing MOST of the american automotive work force.


[quote]Because the United States, alone among advanced nations, has chosen to link health insurance to the workplace, it has also imposed a business cost that is no longer sustainable in a global economy. It's not just that taxpayers pick up part or all of the bill in Japan, Britain, Germany, France, Australia, Taiwan and other developed nations, lifting part of the expense off business. It's that these nations, by streamlining administrative costs and creating universal coverage pools, have also achieved vastly lower costs. Americans spent $5,274 per person on health care in 2002, according to the World Health Organization. The comparable figure in Canada was $2,931. In Germany it was $2,817. In Australia, $2,699 and in Japan, $2,133. All these countries, by the way, had better overall health indicators than the United States.[/quote]

WOW! Finally some in the media and government *might* be catching on to the GREAT scam that is HEALTH CARE in america, and to boot might actually be seeing that we're about to lose our ass on the industry forefront.
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Medicare's administration & overhead costs are unbelievably better than private healthcare. Just because our gov't administers something doesn't mean it's bloated beyond belief. While Medicare does have it's issues -- overhead isn't one of them.
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i just read that in the paper at lunch at BK chowing on a whopper........a surprisingly fair article from the strib, although i do not like the assumed claim they make of other countries having superior health care setups.

[post="50123"]<{POST_SNAPBACK}>[/post]


letme clarify...i did not mean 'fair' article. i guess i was surprised it was not a much more liberal viewpoint. it was a liberal viewpoint, but the strib is usually clueless x 10 on most topics. here they are just mildly clueless.
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Flint's article (another topic) from today cuts directly to the chase our industry is facing with regards to health care etc. everyone in America needs to read that article.
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Health care is a concern, yet we have two directors who are from pharmaceutical companies, Karen Katen from Pfizer, and Percy Barnevick from Astra Zeneca. We are concerned about fuel economy yet a board member, John Bryan serves on the board of British Petroleum. Anyone notice a conflict of interest? The UAW should offer concessions in exchange for a seat on the board. These folks have a true vested interest in GM's success, as do their families and communities. Why not eliminate the jobs bank and put these people to work in the plant doing something. This makes more sense than paying a guy to work overtime, or having contract workers. Hello??? Isn't it time for some common sense?
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Health care is a concern, yet we have two directors who are from pharmaceutical companies, Karen Katen from Pfizer, and Percy Barnevick from Astra Zeneca. We are concerned about fuel economy yet a board member, John Bryan serves on the board of British Petroleum. Anyone notice a conflict of interest?

[post="50382"]<{POST_SNAPBACK}>[/post]

People may knock on dolinger....but look at the wealth of information that post holds.

Now wonder why he says what he says and come from where he comes from. A member of the board of B.P. is on the board for General Motors?!?
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I'm available most anytime. It will be an honor to be interviewed by C&G. Just waiting for Josh.
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for a common sense plan that will work.

[post="51553"]<{POST_SNAPBACK}>[/post]


Maybe if you present some data that shows, your "common sense" plan will work, you would have an ounce of credibility with GM. The problem is you don't have any data to support you opinion (plan). Your plan therefor is just opinion and you know what they say about opinions!

I still have yet to see any competitor of GM implement any of your "Twenty Points" in their own buisness model. And, it has been 6 months since your plan has been made public... have you ever thought why?

Six months ago I said I would revisit this discussion and see what other manufacturers would implement the "Return to Greatness". And I just did. Edited by evok
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Maybe if you present some data that shows, your "common sense" plan will work, you would have an ounce of credibility with GM.  The problem is you don't have any data to support you opinion (plan).  Your plan therefor is just opinion and you know what they say about opinions!

I still have yet to see any competitor of GM implement any of your "Twenty Points" in their own buisness model.  And, it has been 6 months since your plan has been made public... have you ever thought why?

Six months ago I said I would revisit this discussion and see what other manufacturers would implement the "Return to Greatness".  And I just did.

[post="51731"]<{POST_SNAPBACK}>[/post]


I agree, rather than try something anything its just best to sit and do nothing and just watch everything flow away.

Ingenious !
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I agree, rather than try something anything its just best to sit and do nothing and just watch everything flow away.

Ingenious !

[post="51756"]<{POST_SNAPBACK}>[/post]


Have you read the plan? Have you analysed the 20 Points?
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I agree, rather than try something anything its just best to sit and do nothing and just watch everything flow away.

Ingenious !

[post="51756"]<{POST_SNAPBACK}>[/post]


Do you know what GM actually is doing about the dwindling market share? Do you have access to future product plans? Do you know where there future investments lie?

Something is being done, you just don't see it yet.
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I'm willing to *listen* to Buickman..

And no, I haven't read the plan or the 20 points but I also think that a lot of GM and Ford's problem are a result of no common sense.

I'm sure GM has a plan (Well, I'm kinda sure anyway) but my big complaint or issue is that all their 'plans' haven't worked for the past 20 years.

So, I think SOMEONE whether it be Buickman or Kerkorian's rep needs to shake things up or either GM management better step outside of their box, and that also goes for Ford.
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I'd be willing to listen to buickman if he had more to talk about than ousting Wagoner. It's funny how months back, he became so irate with C&G and with Josh when he wasn't being interviewed. He asked for all his posts to be removed, as if they were knowledge that we plebians couldn't have. Now all of a sudden he's "honored" that Josh has shown interest again. Buickman seems to regurgitate everything he says again and again. C&G knows what the real problem with GM has been, always, for decades now, is the PRODUCT. Clean. cut. clear. simple.
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[quote name='turbo200' date='Dec 2 2005, 01:56 PM'][quote]I'd be willing to listen to buickman if he had more to talk about than ousting Wagoner. It's funny how months back, he became so irate with C&G and with Josh when he wasn't being interviewed. He asked for all his posts to be removed, as if they were knowledge that we plebians couldn't have. Now all of a sudden he's "honored" that Josh has shown interest again.[/quote]

First Im not standing up for the guy, but I will say when you guys get tag teaming someone rather than give a listen and open the mind and see the other side, do you not expect them to get irate ?.....yaright !...thats the whole point of it in the first place, isnt it ? Do a little PM chitty chatty then go for the throat because this is someone that does not see our side but rather their own. I think I know a little about this.......do I not ?

[quote]Buickman seems to regurgitate everything he says again and again.[/quote]

Now what is this ? Im thinkin the use of that regurgitating word is meant to be some kind of insult or reference to accute retardation, at least thats how I have come to interpret it and its use here. Just to shed some simple basic knowledge on the subject of someone repeating their stance.......here we go.....ready?......its because thats what they believe in, thats what they are faced with, thats the world that they live in. Rather than deny credit to someones existance, experiance, and evaluation of that givin situation why dont you listen to it, obsorb it and realize that the friggin world is not flat ?

[quote]C&G knows what the real problem with GM has been[/quote]

now, I have been around here enough to know that you know GM's problem is not simple or accredited to a "real" problem. Though myself I would say its mostly because we have allowed foreign competition to purchase property within our country thereby making it alright for the American public to by foreign because its now somehow American :unsure:

[quote]always, for decades now, is the PRODUCT.[/quote]

I still say bullshit to this one. I have asked a few times as to what ricemobile built in the mid-late 80's was a better car than my 1986 Buick LeSabre Limited ? Not a single answer but somehow Im sure some friggin Honda or Toyota or Nissan had the ass tray mounted just perfect so as to prove my LeSabre was justifiably junk.

I will not deny that the lowly Chevy models and their divisional counterparts should have been better and that they were the cars that competed directly with the compact that imports were at that time. BUT! Still everyone pulls them out of their hat to sum up the overview of all GM products.

[quote]Clean. cut. clear. simple.[/quote]

If only !
All the kings horses and all the kings men !

[post="51807"]<{POST_SNAPBACK}>[/post]

[/quote]
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Have you read the plan? Have you analysed the 20 Points?

[post="51764"]<{POST_SNAPBACK}>[/post]


No I havent, and I did think it strange that it could not be posted but yet would be mailed or whatever that deal was, I did not follow those threads because I could see they were becomming a huge gangbang bash fest.

As for analyzing........didnt someone analyze Fiat back in the 90's and make some great "power point" decision based on that analysis ? I guess this would be one of the times that doing nothing would have been the best bet ?
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