Wednesday, May 03, 2006

A Lesson From the World of Business

I'm a shareholder in General Motors, and have been for a few years (before you go feeling sorry for me, I'm also a shareholder of ExxonMobil - yep, Big Oil, baby). GM makes great products, and other than the point of this posting, I'm not going to delve into any aspects of GM except to say: GM's second biggest problem is one of perception, and although this will take time, they should eventually shed their image of less-than-Japanese quality.

GM's biggest problem, however, is cost. All of this is publicly available information (my source for the data that follows is the 2005 Annual Report), so I'd encourage people to check it out if I'm just passing over it and you want more details.

In 1962, GM employed 605,000 people worldwide, 464,000 in the US, where 4.2 million vehicles were sold. In 2005, GM employed 335,000 people worldwide, 141,000 in the US, where 4.5 million cars and trucks were sold. Get the dynamic there? More production, fewer people and way less particularly in the United States.

Here comes the interesting part. In 2005, for every active GM employee in the US, GM supported 3.2 retirees and surviving spouses. In 1962, it was reversed: GM had 11.5 active employees for every retiree or surviving spouse in the pension plan. GM's total health care bill in 2005, including every US employee, dependent, retiree and surviving spouse, totaled $5.3 billion. With a B. GM is the only company in the world with that kind of obligation, and competes against world-wide competitors whose governments cover most of these costs.

Sound like an entitlement program you know of? I'm left to wonder: what's going to happen to the US when that bill comes due for Social Security or Medicare? GM is a corporation and is making its turnaround, but last year they lost $10.567 billion.

There are lots of ideas out there for correcting the impending problems of those two entitlement programs. However, it is going to be up to you and me - We the People - to force the issue. Our elected officials lack the spine necessary to address the problem voluntarily. Only when we demand it - hey, maybe we should have a rally? - will they begin to listen.

Until then, I remain your obediant and faithful servant,
A. Hamilton, aka The Monarchist

P.S. Hoping to soon have a couple more contributors... there will be four horsemen (is that a bad sign?) eventually.

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