On Wednesday, October 1, 2003, at 03:27 PM, Victoria Heller wrote:
Someone needs to address the unpleasant subject of pension/healthcare costs head on - it only worsens as time goes by because of demographics and added interest expense to the debts. How many CURRENT jobs are we willing to sacrifice in order to pay people who are no longer working?
Agreed. But the issue is much more complex...
A related article from today's Briefing.com.....
Rising pension costs have taken a significant chunk out of Detroit's cash flow, and industry analysts expect this to remain a drag on profitability going forward.
This is the sad legacy of downsizing- GM is worst off with 2 retired workers for every one currently on the job! And their pension plan is not fully funded, but operates on a pay as you go basis. Ford and Daimler Chrysler are in almost as bad a shape.
I was in the Detroit area a week ago, and their pushing new cars on employees like crazy to keep the cash flowing. Auto company employees typically get 18% off of list, plus all the rebates. The lease deals are even better, which explains why new Explorers are the most common cars in Dearborn. Despite these desperation deals, it's increasingly agreed that at least one of the big three automakers will go bankrupt in the next few years. Ford has twenty odd billion in the bank and 60% of it's stock is owned by the Fords and employees. Daimler Chrysler's German bosses may kill off cars and the Chrysler brand, but they won't let their company die. My bets are that GM will go belly up.
Now for the Minneapolis content. We are in similar treacherous economic straits. We have an obligation to pay pensions and provide health care for retired city employees for decades to come. We can't downsize our way out of this. And cutting city services will only drive more tax base away and feed Minneapolis death spiral.
We can only grow our way out of this problem. Taking a page from Ford's playbook, we need to quit harassing citizens out of the city and start giving them a good deal. How about a discount on building permit fees until property tax revenues rise again? How about giving citizens help instead of harrassment? We need to make Minneapolis competitive in the housing and commercial space markets or the death spiral will continue.
hidin' out in Hawthorne,
Dyna Sluyter
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