Bloated benefits for unions are sinking automakers

The crisis facing America's Big Three auto manufacturers has, arguably, a single source: legacy costs resulting from union contracts that were negotiated half a century ago. The financial burden thus incurred weighs down their balance sheets to such a degree that, even if the industry in which they compete were thriving, it would be extremely difficult to maintain long-term profitability.

As automobile manufacturing became a global industry, the foreign manufacturers that expanded their operations into the United States flourished. But while Toyota Motor Corp. and Honda Motor Co. Ltd., along with relative latecomers Hyundai Motor Co. and Kia Motors Corp., have a significant manufacturing and sales presence in the United States, they don't have the staggering labor-related financial obligations under which General Motors Corp., Chrysler L.L.C. and Ford Motor Co. are struggling.

GM, for instance, has about 450,000 retirees - more than three times the number of its current full-time employees - to whom it pays pensions and for whom it provides medical care. By some estimates, medical costs alone add $1,500 to the average cost of each GM automobile. And the company is facing an unfunded liability of more than $80 billion, about half its annual pre-downturn gross sales.

Toyota's future liabilities, on the other hand, will remain right where they are today: at zero.

That's because Toyota has put the responsibility for funding their retirements on the shoulders of the employees themselves, through individual investment accounts to which the company contributes...

[you know, like the rest of us][snip]

The bottom line is that if Obama ends up bailing out the auto industry, then the U.S. taxpayer ends up underwriting the leftist agenda of the last half century, as manifested in labor agreements antithetical to capitalism. That it has taken so long for this leftist tactic, in tandem with the current exacerbating financial crisis, to finally bring the auto industry to its knees is a testament to the resilience of capitalism. That Obama's "solution" to this crisis might spell the end of U.S. automobile manufacturing should not be lost on those of us who will have to bear the financial burden of "rescuing" it.

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Sis⋅y⋅phus   [sis-uh-fuhs] –noun Classical Mythology.
a son of Aeolus and ruler of Corinth, noted for his trickery: he was punished in Tartarus by being compelled to roll a stone to the top of a slope, the stone always escaping him near the top and rolling down again.