Toyota Started In 1936, Why No Legacy Costs?

WASHINGTON POST (2006) - GM (GM) refuses to provide legacy costs for its 2005 vehicles. But by my estimate, they were $1,850 for health care, $700 for pensions. Total: $2,550. Numbers Toyota gave me indicate its U.S. health care costs stayed at about $200 a vehicle. And let’s use the same, probably-too-high $50 for 401(k) costs.

GM’s crippling financial burden and huge competitive disadvantage comes from its significant legacy costs: 4.61 retired members and surviving spouses (receiving pensions and health benefits) per active worker.

It’s true that Toyota (TM) hasn’t been burdened with the same legacy costs as GM in the U.S. because it hasn’t operated here as long. But it’s also true that Toyota Motor Corporation has been producing automobiles since 1936, so it’s been around for more than 70 years; certainly enough time to be burdened with some legacy costs, at least in Japan. But if it does have any legacy costs in Japan, it apparently isn’t being crippled and remains quite profitable.

What’s the difference? Socialized medicine in Japan? No UAW in Japan? Comments welcome.

Subscribe by RSS Subscribe by Email

Comment by Jean-Paul Renoir

2008-12-09 03:26:36

1)Japanese tax accounting allows Toyota to basically write off a plant in three years. Their plants are a lot more impressive than ours. It is almost equivalent to immediate write off.
2) The Unions power was curtailed with the total cooperation of the government and the public in the early 50’s through very stringent legislation and an ongoing entente between government and institutional ownership.In the late 40’s and 50’s there was almost a communist scare in Japan. The japanese elite (with the help of the US)stopped it.

Reply to this comment