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Gaffer Variety:
Actuaries 038:
By Willie Gaffer:
May 1, 2006:
One of the big problems for GM, Ford, and many other corporations began in the incompetence of their actuaries. An actuary is actually a statistician who computes insurance risks and premiums and predicts the costs of things like pension and health insurance. For sure, the statistician's calculations will only be as good as his assumptions. One of these assumptions for liability costs will be the predicted life expectancy of the insured people.
In this case the insured people are the corporations' retirees. The costs were obviously predicated on the notion that most of these people would die before age 70. It did not happen. How wrong could they be? Way too many of these hard nosed people are bullheadedly living way into their 70s and beyond. Like me, they simply refuse to do their duty and die. I take pretty good care of me and I expect to live many more years. So too, these other retired old farts.
One major cause of this longevity is improved health care which they are also paying for. I, for one, would have died before I retired but for good hospitals and doctors. I know several other people who managed the same trick. We outlived our call from the grim reaper and continue to thrive. We also continue to suck up on the financial resources of these struggling corporations. These are resources that were intended to be distributed to much younger people. Do you hear sad violin music now? That's strange, neither do I.
So we have massive liabilities that these corporations have created for themselves due to their incompetent actuaries. Even with all of that, however, if they were able to compete in this global economy, they would not be that bad off. Before the global economy these jerks were big time ducks in a small lake. Now they are fat lazy ducks in a big ocean of competition. So, of course, they cannot compete because they have these fat lazy managers from the old school. The old school is heads down, ignore the critics, and do business as usual. To misquote Edsel, "Always complain and never explain." They continue to whine about a level playing field.
I got news for these bozos. The playing field is level. It is no longer tipped in America's favor. Everyone is competing equally. The big problem is, we are not equal. We are not equal to the task of fair competition. We make inferior products that cost too much. We have lost our creative edge. It has been a long time since we have produced even evolutionary changes let alone revolutionary departures from the same-old same-old. The truth is, the Japanese make better Tauruses than Ford does. It's about the quality of the product. Even if we were creative, like in the forties, quality would still count, but price would be much more flexible. You can charge more for a product if it is unique and proprietary.
Maybe that will happen at Ford. They may have something in their new guy Fields. I would be surprised, but I can at least hope. Ford is also one of the few major corporations who are still honoring, to some extent, the commitments they made to us old farts. I dearly hope that continues. If it ends, I won't be able to afford the health care that has kept me alive. Without it, I'll be like too many old timers, having to make hard choices.
The thing is, I am sure there are still good people at Ford who could turn that company around. I'm not so sure of GM, but I suspect it's true there too. The problem is, these people have been brutally suppressed at Ford. If Fields could turn that around and coax these people out or the woodwork, good things could happen. It would take a lot of coaxing, because these are the creative people. They are creative because they are smart. Smart people also have very long memories. They will remember being beat down and they will remember what has happened to other creative people.
It does not help a bit that the Fords have consistently fired
the very people who have made them look good. They also have a
history of using inventions without compensating the inventors.
People don't forget these things and nobody wants to be the next
victim. Even if Fields is aware of what needs to be done, he has
a tough task ahead. I don't envy him, but I do wish him luck.
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