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Who should pay for retired auto workers health care?
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Auto executives, from left, General Motors Chief
Executive Officer Richard Wagoner, UAW President
Ron Gettelfinger, Ford Chief Executive Officer Alan
Mulally, and Chrysler Chief Executive Officer Robert
Nardelli, testify on Capitol Hill in Washington,
Thursday, Dec. 4, 2008, before a Senate Banking
Committee hearing on the auto industry bailout.
(AP Photo/Gerald Herbert)
As Global Warming Examiner, why would I be writing about retired auto workers?
Mainly because I feel that we will need a healthy domestic auto industry to build the new hybrid electric cars that will allow us to cut our consumption of oil and replace it with electricity from green power sources. It also would help our economy if we had a healthy, prosperous auto industry. I just don’t see how it helps us to lay off so many auto workers. It’s not good for us and it certainly is not good for the workers.
In my previous article I talked about the need for a strong economy if we are going to develop clean energy sources and start the long process of moving away from our dependence on fossil fuels. The auto company executives are currently before congress begging for money to keep their plants operating. They are in this problem mainly because their fully burdened labor cost, (including health care for retirees) is much higher than the costs for their foreign competitors.
Auto production has become more efficient over the years so our domestic industry employees fewer workers than it did a decade ago. Our domestic companies have a higher percentage of retirees than the newer production plants operated by foreign companies. I would also suspect that foreign plants have younger workers than GM, Ford and Chrysler; simply because they have been starting new plants more recently. Our country has a tradition going back to the end of World War 2 of paying for workers health care. The unions also got contracts that call for the auto companies to pay for retiree’s health care. This simply has put our domestic manufacturers in a position where they can’t compete and the economic downturn has left them begging for help in Washington.
My solution to this problem is to get the foreign manufacturers to help pay for our retiree’s health care! How could we get them to do this? Take the burden of health care off of all our manufacturers by creating a single payer (government) health care plan that would cover everyone in the country. Fund it with a value added tax. Domestic and foreign manufacturers would each pay the tax based on the value of the car. Cars manufactured in a foreign country would also pay this tax when the car arrives in this country. This would eliminate the incentive for car companies to shift manufacturing overseas to avoid high (including health care) labor costs. We can become competitive in manufacturing again simply by funding our health care the same way the rest of the world funds their health care.
Without a fundamental change in the cost structure of domestic auto companies, loans and other bailouts will eventually fail.
