Fitch: Health care disadvantage will rise for Ford, GM

Fitch Ratings projects that the health care cost disadvantage versus transplant manufacturers, on a per-vehicle basis, of Ford Motor Corp. and General Motors Corp. will expand in 2007.

"Although Ford and GM have recently enacted changes to their hourly and salaried health care programs, these savings are being quickly eroded through continued health care inflation, the absorption of Visteon and Delphi liabilities, and lower U.S. production," Mark Oline, Fitch managing director, said in an agency rating.

Fitch estimated that health care cash cost-per-vehicle built in the United States will rise in 2007 to $1,783 for GM and $1,064 for Ford. The burden is, and will continue to be, much greater on GM, given their larger retiree base. Other factors include the pending absorption of significant Delphi liabilities by GM, and the different hourly buyout programs offered by the two companies.

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