Providing health care benefits to workers, their dependents and retirees adds $US1,400 to the cost of every vehicle General Motors builds in the United States, the company reportedly said.
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“It costs us $1,400 per vehicle built in the United States,” John Devine, GM’s chief financial officer, told an automotive conference in this lakeside resort in northern Michigan, according to Reuters.
Devine, who called for a national solution to the US health system, reportedly said health care costs are expected to rise 8% this year.
“Costs are unsustainable,” Devine said, according to Reuters. “Solutions aren’t easy,” he added. “We aren’t expecting an overnight success. We don’t think there’s a single answer.”
GM reportedly spent more than $4.8 billion on health care for its 1.1 million employees, retirees and dependents in 2003.
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By GlobalDataOverall, the auto industry spent $8.5 billion last year, said Devine, who, Reuters noted, is the latest auto executive to sound the alarm that mushrooming medical costs threaten the survival of the US manufacturing sector.
GM, Ford and DaimlerChrysler’s Chrysler division all have enormous health care liabilities that put them at a competitive disadvantage with foreign-based automakers with US manufacturing operations, the report said.
The foreign companies, or so-called transplants, have nonunion work forces and lower health care costs because they employ younger workers and support fewer retirees, Reuters added.
