Speaking with The Independent, a major newspaper in the UK, General Motors CEO complained once again about the company’s healthcare and pensions costs:

Mr Wagoner also made clear his frustration that his company, unlike its foreign competitors, has to deal with vast social costs and has had to spend some $70bn (£36bn) “in cash” on healthcare and pensions provisions. He wondered aloud about what the opportunity costs to his company have been, from developing advanced new technologies to the “$50” upgrade to a model’s interior that could make all the difference in the showroom.

Sorry, but I haven’t bought this excuse in the past, and I’m not buying it now.

To begin with, past GM executives took on those costs because the alternative would have been to raise wages, a current cost, or give workers a larger say in the business (something Toyota encouraged). After taking these costs on, GM should have banked money while the now-retired workers were still working. Instead, these were a hidden cost of producing cars in past decades.

I will grant that that healthcare costs have risen more rapidly than could have been predicted, but still cannot help see these costs as the result of short-sighted executives thinking, “I’ll be retired with a huge bonus and pension before we have to pay for these.”

Of course, these costs are sunk now. But are they really the reason GM hasn’t developed more advanced technology or provided its cars with higher quality interiors? I see no evidence for this, and much evidence against it. On the technology side, GM squandered hundreds of millions on the electric car program, then abandoned it. They’ve since been spending plenty of money on hybrids and hydrogen fuel cells, but were slow in getting products to market.

The bit that really bugs me is blaming legacy costs for the interiors. I practically lived inside GM for a year and a half conducting fieldwork for my Ph.D. thesis. I saw how attempts to upgrade interior materials were rebuffed because it was not possible to prove that car buyers would actually pay more for a car with a nicer interior. Then and now I could not see how it would be hard to prove this. But the fact of the matter was that those trying to make this case did not have sufficient evidence.

I don’t even see how legacy costs would enter into the equation. They’re a fixed cost. If an improved interior results in a higher selling price, then it’s worth doing if legacy costs or zero or if legacy costs are in the tens of billions. GM might claim it had a limited amount to invest in new products. But including higher grade materials doesn’t affect the amount of investment required much. Instead, it affects the piece cost, how much GM has to pay to buy the part from a supplier. And piece costs are paid for out of vehicle sales, not out of a limited pool of capital.

Finally, we have GM’s current situation. Its legacy costs are higher than ever, yet GM’s new 2007 and 2008 cars have the best interiors ever seen in GM products. If legacy costs were the reason for cheap interiors, then the most recent products should have the worst interiors to date, not the best. Put another way, if GM had the financial ability to create the 2008 CTS now, then it has pretty much always had the financial ability. It just didn’t.

Whenever GM has had record earnings in the past couple of decades, it has not used these earnings to develop better products. Instead, it squandered this cash on expensive acquisitions, poorly designed new plants, vanity projects with no market, and executive bonuses. The fact of the matter is, GM and the other Detroit companies have almost always created their best products when money was tight and the future was dim, not when they were doing well financially.

So, Mr. Wagoner, please lay off the excuses. Legacy costs are an issue, but approach them truthfully. Admit that GM took these costs on without regard to the long-term consequences, and that GM hasn’t always made the best use of its cash. Then make the case for deserving forgiveness and a second chance. Most of all, focus on getting better products out the door, ones that require no excuses and that justify this second chance.