With regard to manufacturing companies, what does the legacy cost issue mean to a company like Michelin North America, near-term and long-term?
“There are essentially two kinds of legacy costs: there are pensions and there’s the medical side. On the pension side, to a large degree you can control your own destiny in the sense that if you cannot afford to promise a benefit then you shouldn’t promise it. There is only one thing worse than not promising a benefit. That is promising it but not being able to deliver on it. I think a lot of North American businesses, through negotiation or otherwise, promised pension benefits they have not been able to pay. The defined benefit plan is a very good example of this, because first you have to fund it as you go forward, and even if you fund it there is an inherent risk in terms of what happens to those funds in the stock market. And then there are mortality tables and discount rates that have a huge impact on that liability. What you have seen Michelin do and you have to do this in a very fair way is come up with a very attractive defined contribution plan and give employees the opportun
