Word: chryslers
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...through the financial statements of the Detroit Three, however, and you can easily conclude that they are money-losing retirement and health-care organizations just masquerading as money-losing carmakers. Consider General Motors, which supports three living retirees for every worker now on the job (at Chrysler the ratio is 1.3 to 1). GM long ago lost its status as the nation's largest private employer, but it remains the biggest private purchaser of health care. Investors value GM's business at $18 billion; the fund it has set aside to pay for employee pensions is worth more than...
...Detroit Three complain frequently about the cost that health care in particular adds to each car they produce in the U.S.--at GM it's $1,600, at Chrysler $1,500, at Ford $1,200. But the cost paid in management attention and focus may be even greater. The single greatest stroke of Rick Wagoner's seven-year tenure as GM CEO, for example, was probably his well-timed decision to use $18 billion in mostly borrowed money to shore up the pension fund in 2003 (yes, $18 billion does seem to be something of a magic number here). That...
...this decade, all three of those trends reversed, and Detroit was suddenly in big trouble again--bigger trouble, in fact, because the companies' ratio of retirees to active workers has only grown. Which has turned up the pressure on retiree benefits. In the case of pensions, GM, Ford and Chrysler now all have enough money set aside to meet their obligations. But none put much in the bank to cover future health-care costs...
Which brings us back to Chrysler, the UAW and what is shaping up to be a very hot summer of contract talks. The company's rank and file are less than thrilled about their employer's leaving the warm embrace of Germany and falling into the hands of New York financiers. "These private-equity firms are like modern-day robber barons," said a worker at the company's Warren truck plant outside Detroit. "People are feeling betrayed by the management...
...chief Ron Gettelfinger opposed the Chrysler sale. But after a quick trip to DaimlerChrysler headquarters in Stuttgart, where Zetsche said he would not be dissuaded from selling and Cerberus was the best of the potential buyers, Gettelfinger offered a tepid endorsement. "It's going to happen, and we're going to make it happen in the best interest of our membership," he said...