With the congressional hearings and press coverage there have been any number of opinions about what to do to keep US automakers afloat, or if we should. The finances involved are complex and much beyond the understanding of the sound bites presented by the press.
Despite the immense complexity of this problem, one thing is clear: the cost to US auto manufactures to produce its products is greater than the foreign competition, particularly those from Asia. What is often cited in the cost are the health care benefits promised to retirees.
I don’t have the numbers on how many of these retirees are eligible for Medicare, or the benefits they receive. I do know that each active worker’s cost contributes about $37,000 per year to pay for the retirees medical benefits. The most automated and sophisticated automotive assembly plant in the world is the Hyundai plant in Alabama. They are not impacted by these legacy health care costs. When subtracted from what Detroit auto workers make, the wages are about the same.
One does not have to be a financial genius to understand that if we had universal health care coverage it would go a long way to solve many of (though not all of) the problems of the US automotive industry, along with other US industries as well.
Universal health care coverage is not a short term solution. But it is one that is necessary for long term viability of US business in a global market.