What GM's Wagoner says on health care, car sales stimulus

WASHINGTON — In a wide-ranging interview Tuesday with a small group of reporters, Rick Wagoner, the chief executive officer of General Motors, weighed in on a number of important issues that affect his industry and the U.S. economy.

Here are some of his views, edited into a question-and-answer format.

Q: Ford recently made a deal with the United Auto Workers union. Does it affect GM's union talks?

A: The Ford program does not meet our needs at all. . . . So we need to do something different, and were working with the UAW on how we might do that. And I think it does highlight (that) we tend to talk about the three U.S. companies and be lumped together, but even with the same labor contract, because of demographics and because of history, etc., we can have some different needs. So what worked for Company A doesn't always work for Company B.

Q: If GM went into bankruptcy, what happens to the 400,000 retirees who depend on GM for health and welfare support?

A: Our pension funds were over-funded up until the last quarter of last year. And so now they are somewhat under-funded, let's say 10 percent under-funded. So there is some risk there, but in the context of what's going on in financial markets, not huge. The bigger deal is post-retirement health care, and we've seen cases (such as steelworkers in a company bankruptcy) in which they have very little coverage. . . . They rely on Medicare and Medicaid, and that's all they get. So that would be a tremendous imposition and difficulty for people if they would have to face that (in a GM bankruptcy).

Q: President Barack Obama is pushing an overhaul for health care. Where does GM stand on this?

A: The impact on us of health-care inflation has been absolutely crushing. Of the $103 billion we've put into post-retirement health care and pensions, about half of that has been to pay post-retirement health care. It's been the biggest single competitive factor we've been dealing with for the past 15, maybe 20, years.

Q: So you support overhauling the system?

A: We're all in favor of the initiatives to improve quality and efficiency, and, frankly, I personally believe that a system that has everyone covered is the right thing to do; don't have a particularly strong view on how that is accomplished.

Q: Are the days of employer-provided health insurance numbered?

A: I think it's going to be a long time before the U.S. moves away from some kind of employer role, and a lot of ideas on the table involve continued employer engagement. So I think it's probably not a likely outcome that we will wave a magic wand and one day soon just switch to purely government or individually provided. So I think companies continue to have skin in the game.

Q: Would a cash-for-clunkers trade-in program help stimulate U.S auto sales?

A: These kind of programs can have a huge impact. Germany has a particularly well-thought-through program that they really began ramping up in earnest in February. And lo and behold, February '09 versus February '08 sales were up, I think, about 15 percent, whereas down in the rest of Western Europe, I think, in terms of 30 percent. So consumers are stimulated to buy. We would be thinking a program along those lines would make sense in the U.S.

Q: Have other countries stimulated auto sales?

A: The other two countries . . . we see sort of bucking the trend to plummeting auto sales would be Brazil and China. And in both of these cases, they have reduced tax rates . . . particularly on lower-consuming (fuel efficient) or smaller vehicles. So, Brazil sales were kind of flat year over year and up versus January. And China has continued to actually be pretty strong.

Q: Have you pushed this idea on the president's automotive task force?

A: We've provided information analysis on what we've seen happen in other (countries) and we've worked with industry colleagues on the kind of programs that might be of interest in the U.S., so hope springs eternal, but I can't tell you I see something imminent.


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