General Motors Closing Plants and Cutting 30,000 Jobs (To Save 7 Billion/Year)
 

NEW YORK (CNNMoney.com) - General Motors Corp. said Monday it would cut 30,000 hourly jobs and close or scale back operations at about a dozen U.S. and Canadian plants in a bid to save $7 billion a year and halt huge losses in its core North American auto operations.

The cuts are 5,000 more than the 25,000 jobs GM had said it would cut in June, and represents more than 22 percent of its union workforce in North America. Many of the cuts would start next year, GM said Monday, despite job protection provisions in its union contract that runs through September 2007.

GM Chairman and CEO Rick Wagoner said he expects another 7 percent of salaried workers in North America would also be cut by the end of 2006, though he gave no specific number of job cuts planned there. Seven percent would equal about 2,500 jobs in the United States and additional cuts in Canada as well.

The automaker said the plan is aimed at saving $7 billion a year by the end of 2006.

Wagoner said the cuts were what the troubled automaker needed to turn around its operations but he wasn't ready to predict when GM will return to profitability. He also wouldn't promise this would be the end of job cuts and plant closings.

"As we sit here today, it's our best guess and well thought out analysis," Wagoner said.. "If we've learned anything in the last five years, it's that there's no guarantees in this business or any other business."

Not surprisingly, the leadership of the United Auto Workers union blasted the move as unfair.

"We have said consistently that General Motors cannot shrink itself to prosperity. In fact, shrinking General Motors only exacerbates its problems," UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement. "Unfortunately, it is workers, their families and our communities that are being forced to suffer because of the failures of others," they added. (Full story).

Wagoner said he had received support from the company's board of directors and from its employees as he moved forward with the cutback plans and that he had no plans to leave the company. Some investors and analysts have lost confidence in Wagoner given the company's spate of troubles this year. (Full story).

"I've given no thought to anything but turning the business around," Wagoner told reporters, adding that he believes his experience with GM should help him lead that effort. "I wasn't brought up to run and hide when things get tough. I'm convinced that's the way that things get righted."

He said the moves were not due to any pressure by the board. "We're not taking these actions because of any pressure on me," he said. "We're taking these measures to get the business right."

Stock rallies, but ...
Some investors liked the move, and GM (up $0.01 to $24.06, Research) stock rose in late morning trading, though the stock is still down about 45 percent this year.

But at least one industry analyst was not impressed.

"The plan is essentially as expected, meaning not terribly aggressive," UBS analyst Rob Hinchliffe wrote in a note to clients, adding that the company's market share, which has been sliding, may fall further. He kept a sell rating on the stock and a price target of $20, below the current price.

In June, GM announced plans to trim 25,000 hourly jobs in its North American operations by the end of 2008 in an effort to stem losses. The company has lost $2.2 billion in the first three quarters of this year, excluding special items. Most of those losses, about $1.6 billion, have come at its core North American auto operations.

The company's contract with the United Auto Workers union essentially prevents layoffs before it expires in September 2007, as the company needs to pay union members whether or not there is a job for them.

Wagoner said that some kind of buyout would likely be offered to speed up the job cuts, but that until the buyout packages are worked out with the union, the company can't say how many of the job cuts would come through retirement and how much through buyouts.

The assembly plants being closed are in Oklahoma City, Lansing, Mich., and Doraville, Ga., with the first two closing next year and Doraville slated to shut in 2008.

Some shifts will be eliminated at three other assembly plants, including Line 1 at Spring Hill, Tenn., and Oshawa, Ontario, Car Plant No. 2, which will both be shut, although assembly plants on the same property will continue to operate.

Other facilities to be closed include stamping plants in Lansing, Mich., next year and in Pittsburgh in 2007, along with two powertrain plants, in St. Catharines, Ontario, and Flint, Mich., in 2008.

And the company will shut three parts facilities in Portland, Ore., Ypsilanti, Mich., and St. Louis by 2007. One other parts facility yet to be identified will also be closed.

With the announced closings, GM is essentially keeping its capacity of large sport utility vehicles and pickups intact, even though big SUVs sales have slumped in recent months in the face of higher gasoline prices.

Wagoner said he believed that a new line of large SUVs due early in 2006 should give a lift to those sagging sales, and that some of its large SUV capacity is being changed to produce either SUVs or pickups, depending upon demand. He said GM needs to keep capacity for the vehicles that it can sell at the greatest profit -- namely the larger vehicles.

Among the vehicles made at the assembly plants being closed are the Chevrolet Impala and its twins, the Saturn Ion, its minivans, the SSR sport pickup and some mid-sized SUVs. The company will have a North American capacity of about 4.2 million vehicles a year at its own plants, down from about 5 million.

"Oklahoma City, (which makes the mid-sized SUV) is a very good plant but a classic example of ... just having too much capacity in that segment," said Wagoner. "That's why that plant in on the list today. We don't have any plants left that aren't very high quality and quite productive. I'm sure I'm not going to satisfy any plant as why they've been chosen to be on the list."

thank god walmart isnt cutting jobs or you would probably be out of luck.

They just rebuilt the Oklahoma City plant after it got hit by a bad tornado a couple years ago and now they are closing it? Ouch..

Good, those fucking unions don't understand unless they're hit hard.

FUCKING GOOD

Damn that sucks.

looks like GM is going under. No surprise, they responded way too late to what the Japanese, Korean and European automakers are bringing to the market.

I guess the unions would rather have GM go completely under, and get purchased for pennies on the dollar by some japanese or chinese car company.

Mmmm... bad news for all folks who will be hit. :(

This is just another non-sustainable industry to go - there's going to be plenty more when a "home industry" can't compete with foreign manufacturers - kinda pathetic.

Underlying is a massive - real massive - problem with a "consumption society" and an ability of pay for the imports of foreign product. The deficit is already more than substantial, but just going to get worse.

Lost jobs suck and so does GM. As far as American cars, Ford is the best IMO.

Mitch

sad for those families affected

It's official: I'm looking for a new job. Hit a nigga up.

I wouldn't say the unions are to blame when its the people who don't want to buy GM cars. They've been steadily losing market share, even when not taking into account the abject failure of the Hummer line.

The best thing for GM would be to completely stop manufacturing cars. They simply can no longer compete. Let them spin off GMAC (one of the few successful elements of the company) and send the rest to a well-deserved grave.

That's the best thing for GM. Of course, there's going to be 100k+ people who'll be completely fucked by that move. All at once, as opposed to all the people getting fucked by degrees by cutting 7% of the workforce here, 12% there, etc.

i will never own another domestic car, u loose a ton of money the second u drive it off the lot.. and beside as one said above, They just cant compete with the foreign vehicles as far as technology/comfort and cosmetics. Im getting ready to purchase a car within the next 6 months and I am only considering between an Audi A6, Nissan Maxima, VW Passat, and maybe a BMW 5 series. Not considering a domestic vehicle... sorry.......Im actually wanting to purchase a Certified Pre-Owned in one those vehicles with like 20k miles on it, and it has to be FULLY loaded with just about every available option on it.. and no more than a year old :thumbsup

Any current/prior owners on the vehicles above... ??? Tell me about yer vehicle and any advice?

too many cars are being made anyway.

Fucking unions.. they deserve to have their jobs out sourced to Mexico..These guys just can't get a clue that the big companies can't keep paying $30 an hour plus full benefits and stay profitable in a global market.

not suprising

The average UAW worker makes $55k/year for 40 hour weeks. That's around $25/hr before tax and medical co-pay. That is, of course, the AVERAGE worker... which is skewed heavily from the median. It's skewed by such people as G Richard Wagoner Jr, CEO/Chairman of the Board/Director of GM:

Cash Compensation (FY December 2004)
Salary $2,200,000
Bonus $2,460,000
Latest FY other short-term comp. $77,962
Latest FY other long-term comp. $79,058

For a Total of $4,817,020

Or, how about:

Mr. John M. Devine , 60
Vice Chairman and Chief Financial Officer $2.95M/yr

Mr. Robert A. Lutz , 73
Vice Chairman of Product Devel., Acting Chief of GM - Europe and Head of Global Product Devel. of North America $2.95M/yr

Mr. Thomas A. Gottschalk , 62
Exec. VP - Law and Public Policy and Gen. Counsel $1.69M/yr

Mr. Gary L. Cowger , 57
VP of Global Manufacturing and Labor of North America $1.51M/yr

Also, in case you haven't been informed, GM itself says that the biggest problem is HEALTH CARE COSTS:

Before you trot out the tired ol' Ayn Rand worship and "unions are bad" regurgitory bullshit, take a moment or three to read up on the topic and get informed.

Isnt their pension fund from old workers what is taking a nice chunk of their money?

Its not the unions dumbass. Its the Bush's current trade policy that makes it a hundred times more profitable for these companies to setup shop overseas, pay workers pennies and import their products back to the US without penalties. Republicans have sold this country and the workers out to business. Get a fucking clue.

Then how does the non-unionized Toyota plant in Cambridge, Ontario manage to stay competitive if what you say above is accurate?

dayum that is a lot of jobs being lost. =\

i wouldn't plan on moving anywhere near flint, mi. its going to be the ghetto from hell here in about 1-2 more years.. there already #4 on most dangerous cities to live in now with even more poverty heading they're way its just gonna get out of hand.

I finally broke down and bought 2 new American (Ford) cars 3 years ago.

Never again. I've owned Japanese cars since I turned 16 (and I'm 44 now, do the math ;) ) and I haven't had as much trouble with every Japanese car COMBINED as I had with the Fords. The Ranger was totaled, so it's gone and I'm waiting until the warranty runs out before I dump the Exploder.

Yeah, maybe an American car is made in Mexico and maybe a Japanese car is made in Tennessee - I just know the experiences I've had with the Japanese Toyotas and Nissans and the ones I've had with Ford.

Didn't see this one coming a fucking mile away.

If you ignore all the signs, you'll end up fucked.

Not gonna be a good christmas for 30k people then :(

Certainly not dude :(

all we know is its bush's fault! bush bush bush evil baby eating kitten killer bush.

:1orglaugh :1orglaugh :1orglaugh

Riiiight...

Maybe it has something to do with the fact that they didn't make a fucking profit cuz they were so fucking stupid and put all their money into SUV's, Muscle Cars, and other gas guzzling cars...

They lost money on every single SUV they sold. THere was an article about it some time ago, but I am too lazy to look for it.

The JD Powers quality and brand study will answer that question.

Hell...I'm happy I made just over $3 a share in the past 5 days.

Are you sure that GM management people are UAW members?

Dude most of the "foreign" cars / trucks are made right here in the good ole USA.. Honda, Toyota all have plants here in the US. Meanwhile Ford builds their shit in Mexico.. GM I'm not 100% about but I know they have a few plants in Mexico.

So if it was all about overseas, then how can Toyota, Honda and Nissan do it just fine?

Ah, typo. That was supposed to be 'GM employees'. Mea culpa. :upsidedow

Ummm isn't that where "benefits" come in? What is it these unions are always demanding? More Pay, More Benefits. ie--health care and 401k's and all that shit that costs companies a arm and a leg..

The same shit as the airlines are always going bankrupt.

Ford also made a simliar announcement last week.

I don't think it's quality. I've owned six new Ford products in the past five years now, and I've never had a quality problem with any of them.

I think the imports are just making new cars that people are interested in.

And I don't think it's fair to say that certain cars are made in certain countries. Volkswagon is making Bugs in Mexico these days, and Ford is making Mustangs in Canada.

Strangely enough, other companies, like Toyota, offer health and other benefits. More than GM, in some cases. I'd suspect less than GM in others.

Even that said, GM would still be plenty profitable if they'd simply make cars that weren't crap. Cars that people wanted to buy.

This image, culled from a recent edition of The Economist, says it all:

http://www.economist.com/images/ga/2005w48/Chart2B.gif

You can't go from 45% of the market to 25% and not feel the pinch... and it's not for being priced out of the market: GM cars are often the least pricey of their respective styles, often several thousand less than foreign counterparts. People buy the foreign cars (which is a misnomer, as 90% of those cars and their parts are produced domestically) because they last longer, drive better, have better fuel economy and retain blue book value far in excess of the 'big 3'.

Union wages and benefits and such are probably not helping the situation any, but laying the blame on unions for GM's complete lack of competence is just scapegoating. GM should have focused on producing a superior vehicle instead of counting on "hot dogs, baseball and GM" jingoist marketting. :2 cents:

I wonder what Barret Jackson's thoughts are on the decline of the domestics.

Do you understand that 6 out of 7 manufacturing jobs since the Reagan era no longer exist in this country today? Where do you think they went? Do you know what a trade deficit is?

Exports decreased to $105.2 billion in September from $108.0 billion in August.

Imports increased to $171.3 billion in September from $167.3 billion in August.

Those number don't even include all the service jobs that went overseas. Think about it the next time you call Dell and can't understand the dude from India.

And its all because GM built SUV's. If you can't add 2+2 then its no wonder this country is in the shape its in.

The Economist had a great article on the success of Toyota back in January

http://www.economist.com/displaystor...ory_id=3599000

Toyota is worth more than the American Big Three put together

The unions will get everything they deserve. I know people that get paid from GM to sit on their ass in the break room because of unions.

And oh no, the top dogs get big money rickholio. That doesn't happen in every other company in the world.

is the power down on PEI?

Very good point.

Rickholio, awesome link man. Thanks http://www.economist.com/displaystor...ory_id=3599000

Lots of gems there re Toyota's secrets to success.

The dude in India didn't demand $65,000/yr. to insert bolt A into hole B.

No sympathy for the unions.

Here in Ontario - Buzz Hargrove must be awful proud of himself :1orglaugh :1orglaugh