Why I Sold My GM Stock
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GM's health care tab for its 1.1. million workers, retirees and dependents is closing in on $6 billion a year, or about $1400 per car.
– Thomas Bray, Detroit News (via Forbes)
update Let me clarify: my point is not disapproval of GM providing health insurance for its employees, nor a reliance on the oversimplified statistic I quoted. Rather, I'm saying that is one hell of a burden for GM to carry on its books that younger or foreign competitors don't have to worry about; a competitive disadvantage that is illustrated by the analogy of a cost per vehicle.
Too bad health care, a fundamental, is so expensive.
Posted by: O'dell on May 12, 2005 12:33 PM | permalinkJerry:
I think GM *will* exist in 10 years (then again Chrysler doesn't), because there are simply too many people who have too much at stake. They have 324,000 employees and $45.77 billion in revenue.
O'dell:
Health care is not necessarily expensive; top-notch health care is.
Of course, saying "You are only entitled to the best health care you can afford" has ethical implications beyond saying, for example, "You are only entitled to the best car you can afford."
Posted by: Joe Grossberg on May 12, 2005 1:31 PM | permalinkTings like that are the ones that make a good social security system essential for a country. I don't mind paying part of my earnings every month to support the system. This can be considered too socialist in the US but people who think like that would probably change their opinion if they ever came to live to any of the European countries that have a universal and free SS.
Anyways, and correct me if I'm wrong, GM is having now the greatest number of employees (current and retired) it will ever have. I don't have the numbers but I guess most of them must be close to 60-70 years old, so the money they expend in health care will be getting lower and lower as the old guys go dying.
Posted by: Priapo on May 12, 2005 2:29 PM | permalinkFirst, I think that selling your stock because you think a company spends too much on health care, as a sole reason, doesn't make sense. Would you buy stock in a company that used free child labor because they spent no money on healthcare? Also, this statements assumes that GM has no other business besides cars, although they also operate financiing , design of engines, mortgages, insurance, etc-- none of which the employees' work results in vehicles...
Posted by: Pam on May 12, 2005 2:38 PM | permalinkSo, Pam. How's your United Airlines stock?
If I want to be socially responsible, I'll give to GreenPeace or the Red Cross. If I want a return on an investment, I'll buy some stock that gives a good long term return proposition. Child labor, minimum wage, 90 hour weeks...these things exist legally outside the USA and have nothing to do with why I personally would buy a stock.
In other words - Yes, I would quickly buy stock if I could earn above average returns on the backs of exploited workers in a third world country. If you own shares in a mutual fund, you are doing the *exact* same thing right now.
Posted by: Bubba on May 12, 2005 4:08 PM | permalinkOne reason I see to sell that stock is the potential flood of cheaply made Chinese cars:
http://money.cnn.com/2005/04/16/news/international/china_cars.reut/
Will the US auto industry be able to lobby well enough to keep Chinese vehicles out? What if China hints that us importing their cars will make them less hostile toward Taiwan?
Posted by: O'dell on May 12, 2005 5:50 PM | permalinkI'm sure China is a concern. But it's also a large market opening up. I sure don't know which way that'll go, in terms of customers vs. competitors (I mean, can you even name a car made in Mexico?).
And, in developed countries, there is a long lag before they start buying cars from countries new on the scene. People dissed Japanese cars for decades, and it's only recently that Korean ones have sizeable sales in the US.
Posted by: Joe Grossberg on May 12, 2005 6:12 PM | permalinkWell, jut for the sake of trivia, I believe that the new Volkswagen Beetles are made in Mexico (as were the old ones for some years).
Yeah, that story did say that there would be some decades before we knew how things would go.
Posted by: O'dell on May 12, 2005 7:40 PM | permalinkNo more comments! Either someone has violated Godwin's Law, I'm tired of the discussion or, most likely, the ten-week window has closed. You can, however, contact me through email.