Industry Sings Health-Care Blues

Suppliers and auto makers frequently fail to see eye-to-eye, but they apparently agree that rising health-care costs make it more difficult for either to compete globally.

Supplier and OEM employees participating in Ward's 27th Annual Supplier Survey also say their health-care coverage is not as comprehensive as it was five years ago, and both sides tend to view blue-collar workers as unwilling to accept concessions to ease the health-care burdens that are threatening the viability of Detroit auto makers. (See related story: The Health Care Crisis)

The United Auto Workers union appears ready for a fight when it comes to protecting the generous health-care coverage it has negotiated with the Big Three. Judging by comments from survey participants – who generally represent white-collar sentiments – it appears a nasty fight is brewing.

“Any real solutions must address the parasites of the UAW,” writes an OEM respondent. “At my facility (General Motors R&D), you could fire half of them and see no effect.”

Another OEM representative agrees the UAW needs to be part of the solution. “They have their heads in the sand and live in denial,” he writes. “The party is over, boys. Get competitive, or all our jobs are going overseas.”

Not all survey participants take such a hard-line approach to the UAW.

One OEM respondent calls the UAW “not totally unrealistic.” Another writes, “The UAW members that I speak with are willing to contribute, but they would like to see better decision making at the top.”

One blue-collar worker from an OEM writes, “We don't mind sharing cost, but the company or workers can't control high costs.”

Many survey participants say the health-care crisis confronting Detroit extends well beyond Solidarity House. “At this point, everybody should step up and contribute more out of their own pocket,” writes an OEM employee.

One supplier respondent says health-care concessions cannot be targeted primarily at blue-collar workers. “We would also like to see the same from upper management,” he writes.

An OEM participant says the UAW might not be so rigid if so many top OEM executives were not taking home 7-digit paychecks. “Excessive salaries of the auto executives are a major cost drain on the U.S. companies,” he says.

A colleague says his company's current management is not responsible for the health-care problem. “It was the previous executives who did the math wrong.”

The survey finds significant disagreement between suppliers and OEMs with regard to the sticky issue of legislative intervention in Detroit's health-care woes.

Nearly one-half of supplier respondents say the Big Three are asking for too much government support and not doing enough to control health-care costs themselves.

Conversely, more than half of OEM participants cited no problem with the Big Three seeking help from Washington.

“Government should not subsidize 'golden benefits' that a few auto workers have, but the rest of the nation does not have,” writes one supplier respondent.

“They let their cost go out of control and expect the suppliers to continue to support their poor management,” writes another.

Washington intervention, however, is a scary prospect for some.

“Government support will not make it any better,” a supplier employee writes. “More government costs more.”

Still, competing in an increasingly global industry requires new thinking about the subject of national health care, some argue. “Japanese companies receive health-care support form their government,” a supplier respondent writes. “Thus, the U.S. needs to provide support to all U.S. companies.”

Another supplier employee agrees: “We can't compete with India and China otherwise.”

An OEM participant says the government needs to place a cap on prescription-drug and hospital costs and doctors' salaries. “Health care is the only industry that is allowed to run totally out of control,” he writes.

Another OEM colleague wants Washington to act, as well. “We don't want to see the steel industry debacle repeat itself,” he says.

The health-care crisis is hitting the Big Three hard. General Motors, for instance, estimates it will pay $5.6 billion this year for employee and retiree health care.

But the pain is trickling down to Big Three suppliers, too. More than half of supplier respondents to this year's survey say Detroit's crisis is hurting their companies' bottom lines.

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