Editorial

Other viewpoints 10/23

The United Auto Workers Union's decision to surrender some retiree health benefits was a rational response to a sad situation. Companies have to make good profits to pay good benefits, and General Motors is bleeding red ink.

It's better to help an ailing employer recover than to shove it toward its death bed, where massive pay cuts become necessary.

The UAW is no pansy of a union. It's one of a shrinking number of unions that still can paralyze an industry. It has used that clout to win some of the best pay available to assembly-line workers in the United States. The average annual pay at auto plants in St. Louis is $78,000 per year, according to government figures. GM retirees pay no premiums for generous health benefits.

But GM is clearly sick. It lost nearly $3 billion in the first nine months of this year, and prospects for the future are shaky. The other big U.S. auto makers, Ford and DaimlerChrysler, suffer from milder versions of GM's disease.

Fewer people want their cars. GM's market share dropped to 25.6 percent in the third quarter this year from 28.6 a year ago. Those lost sales are going to foreign auto makers, most of whom have set up plants in the U.S., quite a few of them non-union.

The foreigners don't face the Big Three's "legacy costs," which include fat pension and retiree health obligation. All three U.S. companies have more retirees to support than they have active workers.

But legacy costs are only part of the problem. The foreigners make more of the cars that customers want, and make them more efficiently.

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