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U.S. automakers need to find a solution to health care costs, Ford vice chairman says

By Amy Wilson
Automotive News / January 14, 2004

2004 Automotive News World Congress index

While changes made to salaried and hourly health care plans have helped Ford Motor Co. slightly, the automaker's vice chairman, Allan Gilmour, told the Automotive News World Congress Tuesday that health care costs remain a critical problem for Ford and the other U.S. automakers.

Those companies are affected more than overseas competitors that have factories in the United States largely because the Big 3 have more retirees and older workers.

"It has created a competitive gap that is driving investment decisions away from the U.S.," Gilmour said. "If we cannot get our arms around this issue as a nation, our manufacturing base and many of our other businesses are in danger."

In 2002, Fordís total U.S. health care spend was $2.8 billion, with $1.9 billion of that attributable to retirees. Health care adds about $700 to the cost of each Ford vehicle sold in the United States, Gilmour said. Ford spends more on health care each year than it spends on steel, he said.

Health care adds about $700 to the cost of each Ford car and truck sold in the United States, Gilmour said. He said Ford spends more on health care each year than it spends on steel.

Gilmour is studying Ford Motor's health care challenges at the request of CEO Bill Ford. That work is in the early stages, and the automaker probably will hire outside help to analyze the cost issues, Gilmour said.

Gilmour's group is trying to understand how health care costs affect the company specifically. For instance, Gilmour said the company already knows that a relatively small number of employees and retirees account for a high percentage of overall costs.

"So we are asking, which employees and retirees?" Gilmour said. He wants to "find out what their health problems are and what can we learn from that. Answering these questions will help us better understand our situation."

Ford Motor plans to develop a position on national health care policy that it will then push in Washington. Gilmour wouldn't say how soon the company will have a position in place.

In the meantime, Ford Motor will continue to pursue initiatives to reduce its own costs. Ford executives also have talked with General Motors and the Chrysler group to explore ways the domestic automakers can band together on the issue.


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