Canada's system of government-financed health care represents about half the cost advantage General Motors of Canada Ltd.'s assembly plants have over U.S. plants, GM Canada president Michael Grimaldi says.
The health care system is a "strategic advantage," for Canada, Mr. Grimaldi said yesterday as he and Canadian Auto Workers union president Buzz Hargrove unveiled a joint letter that the union and all Big Three auto makers are sending to Ottawa.
"The public health care system significantly reduces total labour costs for automobile manufacturing firms, compared to the cost of equivalent private insurance services purchased by U.S.-based auto makers; these health insurance savings can amount to several dollars per hour of labour worked," the union, GM, DaimlerChrysler Canada Inc. and Ford Motor Co. of Canada Ltd. said in the joint statement.
"The erosion of publicly funded health care -- through measures such as the delisting of currently covered services, the imposition of user fees, the failure of the public system to keep up with the changing nature of health care and new costs such as prescription drugs and home care -- will impose significant costs on automotive employers and undermine the attractiveness of Canada as a site for new automotive investment," the letter said.
The public health care system also makes Canadian workers healthier and more productive, the letter added.
Mr. Grimaldi said preserving and enhancing the health care system will make it more attractive for GM Canada to continue making investments here.
He cited the addition of a third shift at one of the company's car plants in Oshawa, Ont., and a $500-million investment at Cami Automotive Inc., a joint venture assembly plant operated with Suzuki Motor Co. Ltd.
The joint statement comes as the CAW is locked in contract talks with the Big Three. At the moment, it is negotiating with GM Canada with a deadline of next Tuesday night for a new contract.
Those talks are going well, both Mr. Hargrove and Mr. Grimaldi said, while tossing compliments at each other.
Mr. Hargrove said he's hoping for a first wage offer from the company by as early as today.
"A lot of money and a lot of jobs will get you an agreement, Mike," he told Mr. Grimaldi.
But the focus yesterday was on health care, including during the talks.
Mr. Hargrove said a presentation from GM Canada's health care provider showed that "some of the increases we're facing in drugs are astronomical."
GM Canada's parent, General Motors Corp., is facing similar challenges, Michael Bruynesteyn, an analyst for Prudential Securities Inc., noted in a recent report.
"We understand from GM that it is the world's largest purchaser of Viagra, a benefit not usually covered by many U.S. employers' health care plans," Mr. Bruynesteyn noted.
Between employees, retirees and their dependents, GM pays for health care benefits for about 1.25 million Americans, roughly the population of Manitoba, Stephen Girsky, an auto industry analyst for Morgan Stanley, noted in a report on GM last year.
The costs of that service amounted to $3.9-billion (U.S.) in 2000, Mr. Girsky noted.
That in turn, represented a little more than $900 on every vehicle GM assembled in the United States in 2000.