GM et al: What To Do Part 6

TW: Certainly the automaker bailout continues to garner major coverage. I would say at this point rightly or not, the anti-bailout folks have the upper hand. The stats below summarize pretty clearly why our US Big Three are screwed regardless of whether current management is competent or not. GM is trying to support over 600,000 retirees and spouses on the back of less than 200,000 current workers (and under all scenarios that number will decline). This is patently unsustainable. It is also loosely emblematic of what is going to happen to our country (and many other countries) as we try to sustain growing numbers of retirees with fewer current workers.

Regardless of whether there is a "bailout" or not, the million plus retired autoworkers will have to be dealt with sooner or later. It is easy for Southern Congressmen with foreign automakers using non-union but more importantly young workforces without significant retiree claimants to claim moral and economic superiority but it is more complicated than their arguments.

From Felix Salmon at Portfolio:
"...all of them are perpetuating the meme that the average GM worker costs more than $70 an hour, once you include health and pension costs. It's not true.

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.

Now that GM's healthcare obligations are being moved to a UAW-run trust, even that fictitious number is going to fall sharply. But anybody who uses it as a rhetorical device suggesting that US car companies are run inefficiently is being disingenuous. As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses. If you take the costs associated with 721,025 individuals and then divide those costs by the hours worked by 180,681 individuals, you're going to end up with a very large hourly rate."
http://www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme?tid=true