Why GM is so oppressed by legacy costs

Michael Mandel

I've been trying to understand why General Motors is so oppressed by legacy costs, and I think I finally have got it. Look at this table:

1985 Latest* change
employment (thousands) (percent)
General Motors 811 324 -60%
Honda 54 132 145%
Toyota 80 264 231%
*2004 for GM, 2003 for Honda and Toyota
Data: Compustat

GM, a company with 300,000 employees, is supporting the number of retirees appropriate for a company with a workforce of 800,000, almost triple the size.

Meanwhile, Toyota and Honda, both growing companies, are supporting a retiree base which is relatively small compared to their current workforces.

Definitely a case where GM is still being punished today for mistakes it made in the past.

Before it's here, it's on the Bloomberg Terminal.