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Old 04-08-2004, 04:47   #1 (permalink)
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U.S.A.:Ford urges solution to U.S. health care mess

Ford urges solution to U.S. health care mess

DETROIT, (Reuters) - Ford Motor Co. called for a "national solution" to the problem-plagued U.S. health system on Wednesday, saying drug companies were the only ones happy with the status quo.

Ford Vice Chairman Allan Gilmour was the latest U.S. auto industry official to sound the alarm about health care, amid warnings that mushrooming medical costs threaten the very survival of the nation's embattled manufacturing sector.

In his wide-ranging remarks, at a Morgan Stanley investment conference in New York, Gilmour also said business conditions in the U.S. conditions in the U.S. and European markets were somewhat better than a year ago.

But he cautioned that a weak dollar and difficult pricing environment posed risks to the automaker's revenues.

"We clearly, in Ford Motor Company, in the auto industry, in big business ... have a health care problem. The only people that I can see that are happy are the pharmaceutical companies," Gilmour said.

"We're going to have to have a national solution," he said.

"That national solution does not mean, necessarily, national health care," Gilmour added. "But as you look at the American system, where part of it is an employer-based system, part of it is a government-based system, and part of it isn't any system at all ... we've got to figure out what in the world to do that makes sense."

Gilmour noted that Washington's Medicare reform legislation had shaved $1.8 billion off Ford's health care liabilities last year.

But Ford spokeswoman Becky Bach said total liabilities increased anyway, and the automaker spent $3.2 billion on health care for its employees, their dependents and surviving spouses in 2003.

By comparison, Ford's net profit for the year, its first since 2000, totaled $495 million.

Gilmour said Ford was in talks with General Motors Corp. , DaimlerChrysler's Chrysler unit and other companies to discuss ways of easing the burden of health care on U.S. companies.

Under the current system, however, he said older companies like Ford were being penalized for paying good benefits to an aging work force, while younger companies with young workers were shouldering far less cost.

"This obviously isn't going to happen," he said. "(But) the ideal thing for Ford Motor Company to do is close up, move to new locations, start with new younger people and go back into business. And then, after a while, do the same thing over again."

In his comments on Ford's automotive business, Gilmour said profit-eroding U.S. consumer incentives were trending up again and were "pretty darn high."

He said Europe was also becoming increasing competitive in terms of net pricing and warned that dollar weakness could hurt financial results from the Premier Automotive Group, Ford's stable of luxury European brands including Volvo, Jaguar and Land Rover.

"Currency has a major effect on the PAG outlook," Gilmour said.

Ford shares were down 31 cents, or 2.21 percent, in afternoon trading on the New York Stock Exchange at $13.69.
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