Cybersam's Blog - The Legacy Cost of GM

Tuesday, November 15, 2005

The Legacy Cost of GM

The last few lectures in our class, Introduction to Technology and Policy, was given by Prof. Dan Roos, a co-author of the "Machine that Changed the World." Overall, I really enjoyed his lectures on the automotive industry. One item from his lectures that I found interesting was that in terms of labor rate, there are 2.5 retirees for every worker at GM. This number prompted me to think... What this means is that an average worker is indirectly responsible for paying the retiring pension cost of 2.5 retirees. On top of that, GM pension funds are still under funded by a few billions dollars!!! Actually, according to statistics that I saw in one of my readings, GM is being competitive on wages with the rest of the automotive industry. But on a whole, the labor cost at GM is just astronomically high due in large part to legacy cost. There are other factors that contributed to GM's current woes, and legacy cost is definitely one of them.

11/15/2005 11:50:19 AM (Eastern Standard Time, UTC-05:00) Comments [1] Business

11/15/2005 4:56:23 PM (Eastern Standard Time, UTC-05:00)

GM seems to be suffering from lack of vision. The pension fund is screwing GM because they can't retool/retrain their people for higher tech jobs. While management is stuck in a upper management/middle management/worker mindset, we can expect no change and an eventual hearty betrayal of their pensioners. This is another example of no respect in American busineess as well, because the GM pension plan is a "problem" rather than a situation of taking care of hard workers that helped build the company. The dinosaur is dying and unfortunately good people are going to be hurt by it while execs, as always, will jump off with their golden parachutes to other companies or enter politics with their money.

Keep it real. I like your blog.

Latez

Analogworm