What’s Good for GM?

What’s Good for GM?

General Motors must shoulder blame for a faulty product mix and a stubborn resistance to the idea of single-payer health insurance, which sent benefits costs soaring.


General Motors is headed for the wall. One of America’s largest corporations recorded its biggest losses ever as its US market share dropped to the lowest levels since before it overtook Ford in the 1920s. GM’s executive team, led by chair and chief executive officer Richard “Rick” Wagoner, has sought to paint the company’s difficulties as the result of unforeseeable changes in consumer preference and the rising cost of healthcare, but neither is the case. GM’s faulty product mix–too many SUVs and not enough superior car products–rests squarely on its management’s shoulders. As for skyrocketing healthcare costs, GM’s officers have failed to advocate a remedy that is not just in their workers’ interest but in their shareholders’ too–national healthcare.

The corporation says that employees’ private healthcare plans cost about $1,500 for every car it sells. In every other area of cost, GM managers see their duty as paying the lowest prices possible. If one of its competitors buys dashboard moldings more cheaply in China, GM demands without hesitation that its suppliers deliver it moldings at the same price or it takes its business to China, as it has increasingly done in recent years. Yet it seems institutionally unwilling to speak up for the national healthcare that would save it tens of billions in America, where it spends nearly $6 billion a year on healthcare.

The corporation’s reticence seems even more peculiar in view of its experience building cars in Canada, a country that adopted a single-payer healthcare system more than thirty years ago. As Morton Mintz reported in these pages, top executives of the Big Three US automakers’ Canadian units and the leader of the Canadian autoworkers union proclaimed, in a “Joint Letter on Publicly Funded Health Care,” that the country’s single-payer healthcare system “significantly reduces total labour costs…compared to the cost of equivalent private insurance services purchased by US-based automakers” [see Mintz, “Single Payer: Good for Business,” November 15, 2004]. At a press conference Michael Grimaldi, president and general manager of GM Canada and a GM vice president, called single payer “a strategic advantage for Canada” and its biggest export industry, automobile manufacturing.

GM’s US management is not alone in dropping the ball on national healthcare. Few executives have come out for it, though many corporations and their shareholders would benefit. And instead of confining their energies to negotiating the terms of the givebacks they are being asked to sell to their members, the leaders of the United Auto Workers’ union would be well advised to lobby more vigorously for the cause of universal healthcare, which they’ve only lately endorsed.

General Motors has a unique role in America, however, and its leaders a special sort of bully pulpit, as they demonstrated following the September 11, 2001, attacks on the World Trade Center. As a nation stood by, stunned, GM launched a massive patriotic advertising campaign that stimulated an unprecedented SUV-buying frenzy. If nothing else, the success of this campaign showed what GM can do to forward a cause if it wants to.

When queried about government health insurance, Wagoner has said that he feels it inappropriate to inject GM into political debates. That statement must tickle those who remember the supposedly recalcitrant chairman stumping the nation on behalf of George W. Bush’s second round of tax cuts or his corporation’s outspoken positions against emissions regulations, fuel economy standards and the Kyoto treaty–indeed, against the very existence of global warming. Few will remember that GM, along with Ford and Chrysler, was actually standing in the wings to endorse the ill-starred national healthcare plan forwarded by the Clinton Administration in 1993. When it crashed and burned, the Detroiters quietly let themselves out the back door.

It may be that Wagoner and company fear the opprobrium they’ll face at their country clubs if it becomes known that they’re advocating something that sounds like socialism–even if national healthcare is a given in almost every capitalist land. Yes, it’s true that such a system would not only benefit GM and its workers but also hundreds of millions of un- and underinsured Americans. But in the long-established matter of the responsibility of the corporation and its officers to shareholders–which may be summarized briefly as “money talks, everything else walks”–there can be no argument that passing the cost of one’s workers’ and retirees’ healthcare to the federal Treasury makes anything other than complete business sense.

Shareholders, unite! Right-wing ideology shouldn’t be allowed to trump cost reduction and profit. Especially when, to paraphrase a former GM chair, What’s good for General Motors is also good for America. And vice versa.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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