GM says it has 2.5 retired workers for every 1 active employee -- a ratio much greater than the forecast for the Social Security program when baby boomers have retired and there will be an estimated 1 beneficiary for every 2.1 active workers.
All told, Wagoner said, these costs add $1,500 to the price of each GM vehicle; that compares with about $300 for Toyota Motor Corp. in this country.
GM needs a considerable amount of outside help, especially from the UAW -- which represents 120,000 hourly GM workers in the United States -- to make a dent in its liabilities, analysts say. For example, the company would save more than $900 million a year if its hourly employees paid for the same share of healthcare costs as do its 40,000 salaried workers, said John Devine, the company's chief financial officer.
UAW officials have said there is room within the existing contract to deal with those issues without having to reopen the accord. A new UAW contract won't be negotiated until 2007.
The two sides are talking: The first session on healthcare issues was held this month. Wagoner has put Gary Cowger, 57, formerly president of GM North America, in charge of working with the union.
General Motors needs "to have a discussion with the UAW about giving up some benefits for current retirees so there will be something in the kitty to pay for future retirees who are current workers," said Maryann Keller, a former Wall Street automotive analyst who runs her own consulting firm. "Short of that, no one will be getting anything in the future."
GM's problems today are the cumulative effect of decades of mismanagement that it has fallen on Wagoner to repair, industry analysts say.
"GM's legacy costs are largely the result of shortsighted thinking going back 40 or 50 years," said Gerald C. Meyers, a business professor at the University of Michigan. After World War II, workers demanded better wages, and automakers "didn't want to pay it out directly, so they decided to give their workers a lot of benefits instead," he said.
The company's slide began with the 1973 Arab oil embargo and long lines at the gas pumps. People started buying Japanese economy cars, and the federal government began demanding improved emissions and more safety features. GM soon was spending its cash on smog controls and better bumpers.
