displaced workers? GM plans to slash 25,000 workers
Automaker also plans to shut plants
ELMAT: Automakers promised too much to their employees at a time that they need then. Circumstances chaged and they stuck to it. Now they just can't fullfil those promises.
I went contractor long time ago because it was clear that the promises couldn;t be fulfilled. Any worker in this planet have to see this employees' contracts are a thing of the past!
By Rick Popely, Tribune staff reporter. Tribune news services contributed to this report
Published June 8, 2005
General Motors Corp., once a swaggering industrial behemoth admired and envied around the world, is cutting at least 25,000 U.S. manufacturing jobs and will close auto plants in a sweeping attempt to return to profitability.
Delivering the news at its annual meeting of shareholders--some of whom loudly called for his resignation--GM Chairman and Chief Executive Rick Wagoner said the cuts would save the automaker $2.5 billion annually by 2008.
After having two months of little to say about plans to turn around its struggling North American automotive operations, Wagoner unveiled his plans at the meeting in Wilmington, Del., and it wasn't pretty. Nearly one in every five GM jobs in the U.S. would go away over the next three years, mainly through attrition.
It's the biggest job cut for GM since 1992--at that time, the carmaker employed more than 200,000 workers. GM, maker of Chevrolet, Cadillac and Saturn among others, currently employs about 111,000 in manufacturing plants in the U.S.
GM didn't say which plants may close, but one in Janesville, Wis., that makes sport-utility vehicles, could be a candidate, industry analysts say.
Months of sales declines, especially of its once hot-selling SUVs, and steep health-care costs for employees and retirees have squeezed the automaker. Rising oil prices have left many of GM's larger vehicles sitting on showroom floors collecting little more than dust.
Perhaps more troubling longer-term, GM continues to struggle to compete with its overseas competitors, namely Toyota Motor Corp., which has steadily gained market share at GM's expense.
GM lost $1.1 billion in the first quarter, mainly from sagging sales of sport-utility vehicles in the U.S., and GM's credit rating was downgraded to "junk" status last month.
Even with the major job cut--22.5 percent of GM's hourly workers--some analysts said the attempted fixes didn't go far enough.
"While management appears aware of the significant issues, there does not appear to be enough detail in Wagoner's remarks that tells us how the losses will be significantly reduced in the near term," Morgan Stanley's Stephen Girsky wrote in an analysis Tuesday.
The 25,000 job cuts, Girsky said, is "roughly in line with recent attrition and does not appear to be an acceleration."
Brett Hoselton, senior auto analyst with Key Banc Capital Markets, called the announcement a "short-term Band-Aid that doesn't address the longer-term issues." The main one, he says, is that GM is not building compelling products.
Still, the automaker will be much leaner by the time it's done, scaling back to staffing levels not seen in years.
Tuesday's 2 1/2-hour meeting was attended by about 200 shareholders, double the typical number in recent years, and some put the blame for GM's woes squarely on Wagoner and suggested he resign.
"This company is sick," said James Dollinger, a Buick salesman from Flint, Mich., who angrily told Wagoner he should resign.
Wagoner promised that "great cars and trucks" are coming, but Hoselton said he has been underwhelmed by recent introductions such as the Chevrolet Cobalt, GM's first new compact car in 20 years.
Roughly 6,000 United Auto Workers members retire or quit each year, so GM could meet most of its workforce reduction goal without layoffs. Laid-off workers continue to collect most of their base wages for the life of a UAW contract, in the case of the current one, until 2007.
Girsky expects GM to lose $4 billion this year and said attrition won't reduce costs immediately.
Wagoner did not say when GM expects to be profitable, but his remarks addressed demands from Wall Street and stockholders to cut the automaker's North American manufacturing capacity, currently 5 million vehicles.
GM has 62 assembly and parts plants in North America, 54 in the U.S. Sales in the U.S. are off 6.7 percent this year, and the company's market share has fallen to 25.7 percent from 27.2 a year ago. That's a far cry from the 1970s, when nearly one of every two cars sold in the U.S. was GM-made. |
