Health costs make GM sick

Health costs make GM sick

It seems General Motors, the largest car company in the world, is suffering from a bad case of “health-care-itis”. While the company continues to generate revenues larger than the GDPs of many small countries, it has recently found itself on relative hard times. 40 years ago, GM was synonymous with the American dream and the company produced more than half of all cars sold in the US; today its market share is around 25%. Adding to the company’s ‘woes’, GM’s stock price has plummeted 45% over the past year. At the heart of the company’s problems, claims GM, are the soaring cost of health care – estimated to be around $5.6 billion this year alone. For every car it produces, GM says it pays out $1525 in health care expenditures. That is more than it spends on steel. By way of contrast, Japanese automaker Toyota was able to enjoy sales increases of 23% this past year due partly to the fact that the Japanese government, not Toyota, covers almost all health care costs in Japan.