Sunday, August 20, 2006

Wagoner: Feds must do more

Friday, August 11, 2006
Wagoner: Feds must do more
GM CEO says Washington isn't showing leadership on crucial business issues like health care, energy policy.
David Shepardson / Detroit News Washington Bureau

TRAVERSE CITY -- General Motors Corp. Chairman and CEO Rick Wagoner sharply criticized government officials Thursday for failing to show leadership on crucial issues such as health care and energy.

"Some of the things that we all believe are necessary to ensure the continued strength of the (manufacturing) sector, which I think is just vital ... we just don't see the leadership," said Wagoner, speaking at the auto industry's Management Briefing Seminars in Traverse City.

Wagoner's comments followed similar sentiments expressed a day earlier in Traverse City by Mark Fields, Ford Motor Co.'s president of the Americas.

Wagoner and the CEOs of Ford and DaimlerChrysler AG's Chrysler Group have been asking for a sit-down with President Bush for months, but the meeting has been postponed at least twice.

Last month, Wagoner appeared on Capitol Hill asking Congress for a number of reforms to help businesses cope with runaway health care costs.

"They've just taken a complete pass on doing something about the health care situation," Wagoner said Thursday. "It's driving jobs out of the country."

On another topic, Wagoner also said GM has reduced its forecast for total U.S. auto sales to 17 million in 2006, down from 17.5 million in 2005. That number includes heavy trucks.

"If somebody would have told all of us that oil prices would be as high as they are today and auto sales in the U.S. would be staying and running at the rate they have, I think we'd probably have said, 'Wow that's a pretty a robust market,' " he said. "We're not overly negative, but certainly we have to be concerned."

He also said the company continues to make progress on talks with Delphi Corp., GM's former parts division. Delphi, with the financial assistance of GM, is trying to work out an agreement with United Auto Workers to lower wages and benefit levels that would avoid a potentially crippling strike.

Delphi and UAW are due in bankruptcy court today to resume hearings on Delphi's request to void union labor contracts.

Wagoner also said Thursday that GM is scaling back its production of newly redesigned large SUVs to make sure dealer inventories don't get too high. GM had planned to run plants on overtime for the rest of the year, which won't be necessary, he said.

But it was the normally reserved Wagoner's criticism of federal leaders that had auto industry insiders buzzing Thursday at the auto confab.

GM is the largest provider of health care in the United States, spending $5.3 billion to cover 1.1 million people in 2005. The company expects its health care costs to rise to $7.4 billion by 2009.

U.S. Rep. John Dingell, D-Dearborn, said the auto industry has been frustrated by a lack of action.

"Let's be honest -- this administration done nothing for the auto industry except to whine that they want a bailout when the industry doesn't want a bailout," said Dingell, adding that health care costs are becoming untenable for the many large businesses. "It's breaking industries all over the country."

Dingell noted that in next year's contract talks with the UAW, health care is sure to come up in what will be "a terrifying set of negotiations," Dingell said. UAW President Ron Gettlefinger is going to have "a hell of a time between a rock and a hard place" as the automakers demand more health care and other concessions.

Wagoner, echoing Fields comments Wednesday, said manufacturing isn't as valued in the United States as it is in some other countries.

"There is somewhat of an under appreciation of the importance of the manufacturing sector in the U.S.," he said. Fields made the same point in his appearance in Traverse City.

"In Asia, the approach is vastly different. Governments and consumers see the auto industry as strategically important, vital to national interests and deserving of full support at every level of their national economies. Asian nations value their established automakers, and they root them on to success," Fields said. Wednesday in Traverse City. Wagoner also said the federal government hadn't thoughtfully addressed the nation's energy issues.

"Energy policy is another good example: By simply taking a pass and say buy whatever's cheap, we have what we have today," Wagoner said. "If we want to have a policy which doesn't rely exclusively on imported oil, we're going to have do something other than every day toss up the ball and say, 'OK, go for the cheapest stuff.' There's got to be a more thoughtful policy than that."

Toyota Motor Manufacturing President Gary Convis, offered comments in support of Wagoner.

"A good energy policy is very important to the future of our kids," he said. "The government has to take a very proactive long-term role in that. There's a limited amount of resources and it doesn't take a brain surgeon to figure out that we have to do something different."

The Bush administration has sought authority to raise fuel economy requirements for passenger cars. The Big Three have strongly opposed efforts by some in Congress to mandate a specific fuel economy requirement.

Many observers agree that bills to reform fuel economy for passenger cars, which have remained at the same level since the mid-1980s, aren't going anywhere this year.

U.S. Sen. Debbie Stabenow, D-Lansing., said in an interview that she agreed with Wagoner's comments.

"I think I know who Rick was talking about," Stabenow said, blaming the Republicans. "The White House and Congress have not stepped up to support the auto industry and manufacturing in this country."

She's offered a series of bills to help the industry with its health care costs, especially catastrophic health care costs, which account for as much as a quarter of the $10 billion the Big Three spent on health care in 2005.

You can reach David Shepardson at (202) 662-8735 or

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