Location: United States

Thursday, September 01, 2005

It's a good week not to have worked your way up to mid-management:

Ford Motor Company is eliminating up to 1,000 white-collar jobs. GM is going to cut double that number.

Both companies are being hit hard by rising fuel costs that are forcing consumers to choose more fuel-efficient models - which generally means "imports". As far as that goes, I have little sympathy for either company losing market share to a better product. After all, that is supposed to be the way the market works. Better products sell more units.

If we look through the article, though, we find another problem tucked away:

"GM is seeking to cut costs as it faces vastly reduced profits this year and an expected first-quarter loss due to rising health care costs, disappointing sales and shrinking market share in North America."

In November of last year, Ford mentioned a similar problem.

It's no mistake that William Ford himself has been pushing for a national dialogue on heath care costs.

How big of a problem is it? Well, in 2001 Ford Motor Company's share of the health bill for its 500,000 workers was $2.5 billion. That was a single-year rise of over 25%. Don't get sucked into the idea that it's all about health care law suits, either. Ford sites its single biggest problem is providing prescriptions to its retirees. Put simply, those who use the most medicine are bankrupting the system.

But you can't blame them for doing so. After all, the whole reason for having insurance is to use it when you get sick and these are people who have worked their whole lives to make Ford Motor Company one of the biggest automotive companies in the world.

In the early 1990s, Ford went on a buying spree and picked up British Leyland, Isuzu, Fuji and part of Fiat. It actually gets tricky trying to figure out what Ford owns - Fuji and Subaru merged and the new company bought out Isuzu and also bought a minority share of the Brazilian operations of Cummings diesel (which is why the upsized F-250 diesel was a big hit a few years back). Ford owns Landrover and Jaguar (suddenly that Jag isn't so wonderful when it's just an expensive Ford). They also own Mazda, Panoz, Saleen, and Volvo.

With all of the big powerful engines and sports cars, it would be easy to think of Ford as trying to compensate for some inadequacy. In fact, I believe that is exactly what they are doing. They are trying to compensate for inadequacy of health care costs.

Almost every country in which Ford (and GM) snapped up subsidiaries has some sort of universal health coverage. It is the government that faces escalating health costs, not individual employers. Obviously, the government then passes on the costs in taxes, but that cost is spread out so widely that it doesn't threaten the livelihood of the companies. It should be telling that almost all of the cuts in both GM and Ford have taken place in THIS country while workforces in countries with universal coverage have actually expanded - including our northern friends in Canada. Why hire an American engineer and face millions in additional health care costs as he or she ages when you can hire on only a few hundred miles to the north and NEVER FACE A SINGLE HIKE IN HEALTH INSURANCE COSTS?

I disagree with William Ford. It's long past the time to have a national dialogue on health care and health care costs. We spent the entire twentieth century talking. It's time to do something - and not something stupid like limiting liability for malpractice. It's time to move forward on providing basic health care for everyone. Every minute that we don't, we are costing people lives and businesses money. Lives, of course, should be more important than money, but this is America - and we love our businesses that worship the Yankee Greenback.


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