Monday, November 21, 2005


cuts 30,000 workers

Ailing automaker to close 9 plants, including 3 in Michigan. Move will shave costs by $7 billion.

Detroit News Staff
Wagoner



Plants affected:


Assembly:

• Oklahoma City, Okla., will cease production in early 2006.

• Lansing, Mich., Craft Centre will cease production in mid-2006.

• Spring Hill, Tenn., Plant/Line No. 1, will cease production at the end of 2006.

• Doraville, Ga., will cease production at the end of its current products' life cycle in 2008.

• Third shift will be removed at Oshawa Car Plant No. 1, in Ontario, Canada, in the second half of 2006. Oshawa Car Plant No. 2 will cease production after the current product runs out in 2008.

• Third shift will be removed at Moraine, Ohio, during 2006, with timing to be based on market demand.

Other facilities

• Lansing, Mich., Metal Center will cease production in 2006.

• Pittsburgh, Pa., Metal Center will cease production in 2007.

• Parts Distribution Center in Portland, Ore., will cease operations in 2006.

• Parts Distribution Center in St. Louis, Mo., will cease warehousing activities and will be converted to a collision center facility in 2006.

• Parts Processing Center in Ypsilanti, Mich., will cease operations in 2007.

• One additional Parts Processing Center, to be announced at a later date, will also cease operations in 2007.

• St. Catharines Ontario Street West powertrain components facility in Ontario, Canada, will cease production in 2008.

• Flint, Mich., North 3800 engine facility ("Factory 36") will cease production in 2008.



DETROIT -- General Motors Corp., on the brink of a financial crisis, announced plans today to cut 30,000 hourly jobs in North America and close nine North American assembly, stamping and powertrain facilities by 2008.

The long-awaited cuts were deeper than expected at a time when the automaker is burning through cash, fending off bankruptcy rumors and close to losing its position as No. 1 global automaker to Toyota.

In Michigan, GM will close its Lansing Craft Centre, a Lansing stamping plant and a Flint engine plant. The plants employ about 2,400 workers.

"The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," said GM Chairman and CEO Rick Wagoner said in a news conference at the automaker's Renaissance Center headquarters.

"But these actions are necessary for GM to get its costs in line with our major global competitors."

The cutbacks are expected to help GM reduce its annual costs by $7 billion a year.

GM said it will achieve most of the job cuts through attrition and early retirement. Any early retirement program would require an agreement with its unions, which GM said it hopes to reach soon.

The company said it would take a "significant" restructuring charge in conjunction with the changes and any related early retirement program. Details of those charges would be released later, GM said.

Wagoner also said more white-collar job cuts were planned for next year. Since 2000, GM has cut its salaried work force by 32 percent.

By the end of next year, Wagoner said the reduction would be 40 percent.

GM has 74,000 workers in Michigan, including 46,000 hourly and 28,000 salary.

Metro Detroit did not take the brunt of the GM's restructuring actions. A parts processing center in Ypsilanti will be closed. Parts packaging operations in Ypsilanti and Pontiac will be evaluated.

GM said the other assembly plants that will close are in Oklahoma City, Spring Hill, Tenn., Doraville, Ga., and Ontario, Canada. A shift also will be eliminated at a plant in Moraine, Ohio.

A powertrain facility in Ontario and a stamping plant in Pittsburgh also will close.

In all, GM is removing 1 million units of production.

GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals.

The announcement caps a dreadful year for GM.

GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity.

The company has lost $4 billion in North America and lost market share, triggering a massive sell-off of its shares. With its credit rating dropping deep into junk status, some analysts have said bankruptcy is likely if the automaker doesn't stop burning through cash. GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors.

Last week, after the automaker's shares fell to their lowest level in 18 years, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.

Wagoner said he believes the moves, along with GM initiatives to cut health care costs and improve its brands should be enough to turn around the company.

"A lot of work went into this," he said. "It's comprehensive and it's going to address what we need to address."

But he added that he couldn't make any guarantees.

Wagoner brushed off questions about his own future, saying GM's board of directors and employees had been very supportive of him.

"I wasn't brought up to run and hide when things got tough," he said.

Last week, Ford Motor Co. told employees it plans to eliminate about 4,000 white-collar jobs in North America early next year as part of a restructuring plan.

Wagoner said the plans were outlined Friday in an e-mail to employees from Mark Fields, president for the Americas.

The cuts will be in addition to 2,750 North American salaried jobs that Ford earlier said it wanted to cut by the end of 2005. Ford started the year with about 35,000 salaried workers in North America.


The Associated Press contributed to this report.

 

I'm sure this is just the first of many more drastic measures to be implemented in the future.

 

yeah i heard about the 30k layoff today morning....

who else think this is some sort of last measures by GM? i do

 

Me too. They've been discussing bankruptcy for the past few years now. It's worse than Mitsubishi Motors NA. And yet they keep redesigning/introducing new vehicles.

 

This sucks for all the people affected with christmas coming and all. If their cars looked better and held value they would have had a better chance. I saw a commercial with them giving away gas for a year or two or was that chrysler.

 

Actually I heard Mitsubishi was doing that, maybe just locally?

 

Time is running out for last measures from the General. Whether they realize that or not is debatable. One thing is for sure, cost cutting will not prevent bankruptcy and the layoff is just cost cutting. GM moves slower than Toyota which means there are no new models going to be coming out that are surprises. If the big truck redo doesn't spur sales, they are in deep doo doo. You have to ask yourself if the world is waiting to rush to dealerships to buy a GM truck if new designs come out? Fuel prices may finally be catching up with sputes and trucks, leaving them to applications where they work for a living. All the auto makers have been pleasantly surprised by the profits they unlocked with trucks and sputes, maybe none more so than the US makers. Now let's see, when you get to the passenger car side there is the vette on the performance side but the value doesn't outweigh the problems. GTO? Impala? Solstice? Certainly not the kind of models to ever generate the revenue needed to support all those retired and non functioning UAW members (both working and job banked).

We tend to be pretty arrogant here about reliability but then Toyota/Lexus is the world standard. But even taking them out of the equation with the exception of some glimmers from Caddy and Buick, GM quality/reliability is awful. If any of you have flown the bankrupt airlines recently you are probably familiar with just how POd flight attendants are with the situation and can't help but lavish their disappointment on their paying customers. I guess in their tiny minds the self loading cargo is the reason why the "Your oxygen mask will drop from the overhead..." job isn't worth a $100K a year with full pay in retirement. So how willing will I be to give the general a stack of bucks to get a vehicle made by a bunch of POd UAW members? Going to the SF auto show shortly but I doubt there will be anything at any GM brand that would interest me.

 

When I think of GM, the only car I think of is the Corvette. When I try harder I think back with fondness of my 73 Monte Carlo. I had a 77 too but that 73 was one of the sweetest cars ever created. But look at the picture. Nothing new comes to mind. I'm trying right now and can't come up with anything. There it goes. The XLR just came up. Oops, that's a Corvette with a Caddy body on top. The General had the world to it's own for so long it forgot to keep up with the competition. Now they see the result of that. I feel bad for the people losing their job. I'm sure a lot of them will have a big pay out and a lot more others are close to retirement. Still stinks though. It just doesn't make sense. A lot of poor decisions. The F bodies for example. Relatively cheap car with powerful torquey engines. You still see them all over the place. They discontinued them and can't make up the sales. How stupid. There are Camaro and Firebird followers as long and old as the company itself and you discontinue the best sellers. For what reason? Just dumb.

 

Not dead sure, but this is the same as the plan they had from the summmer.

But now it's 30,000, vs 25,000 first noted.

 

I hope some of these 30,000 workers have other job skills...
Even the UAW can't save them now.

 

Automaker's 'tough medicine' aims to restore profitability but analysts say tougher moves are needed.


By Bill Vlasic, and Brett Clanton / The Detroit News


DETROIT -- With its U.S. market share in a decades-long tailspin, General Motors Corp. took dramatic steps Monday to downsize its North American operations by shuttering nine plants and slashing 30,000 jobs.

The long-anticipated restructuring represents GM's deepest cost cuts since the early 1990s, and sets the stage for a showdown on jobs with the United Auto Workers in the upcoming 2007 national contract talks.

In announcing the moves, GM Chairman and CEO Rick Wagoner said the automaker needs "tough medicine" to bring down its structural costs and ultimately return to profitability. Even so, analysts remained skeptical that the cutbacks would revive GM.

Wagoner denied once again that the world's largest automaker is a candidate for bankruptcy, but said Monday's actions were a critical component of GM's goal to cut costs by $7 billion over the next three years.

"We're not taking these actions to relieve pressure," Wagoner said at a press conference at GM headquarters in Detroit. "We're taking these actions to get the business right."



UAW President Ron Gettelfinger described the massive restructuring to come as "extremely disappointing, unfair and unfortunate," and said its shadow has already been cast over the 2007 labor negotiations.

"Today's announcement clearly makes those negotiations much more difficult," Gettelfinger said in a statement.

The breadth of the cutbacks reflects GM's bleak performance this year. The company has lost more than $4 billion in North America alone, and its U.S. market share sank to an all-time low of 26 percent through October.

GM said assembly plants will close in Oklahoma City, Lansing, Doraville, Ga., and Ontario, Canada. One facility will close and one will remain open in Spring Hill, Tenn. The company is eliminating shifts at plants in Moraine, Ohio, and Oshawa, Ontario.

Beyond that, GM will close two stamping plants -- one in Lansing -- and two engine plants -- including a large factory in Flint. Several parts distribution centers across the country will be closed, including an Ypsilanti site with 90 workers.

Industry analysts said the cuts were expected, but are hardly enough to ensure GM's long-term revival.

"The plan is essentially as expected, meaning not terribly aggressive," said Rob Hinchliffe of UBS Securities. "We estimate the cuts imply that GM is expecting to operate at 25 percent share. Given steady share losses, this may prove optimistic."


Capacity will go down


The cutbacks will remove about 1 million vehicle units from GM's North American production, trimming the company's annual capacity to about 4.2 million cars and light trucks.

"They have finally and publicly faced up to the reality of the fact that they've got far too much capacity," said Joseph Phillippi, an industry analyst with Auto Trends Consulting in Short Hills, N.J.

Wagoner said the job cuts will be implemented by 2008 through normal attrition, early retirements and buyouts.

"We're not going to get 30,000 people from one day to the next, but we'll get it on a cumulative basis," he said.

GM's salaried work force will also continue shrinking in 2006 as it has for the past five years, Wagoner said. One analyst, Rod Lache of Deutsche Bank, projected as many as 6,000 jobs will be lost in the salaried ranks.

Overall, Wagoner said GM expects to trim $7 billion in costs from its annual North American operational budget of $41 billion. The cuts include health care savings negotiated last month with the UAW.

But while the UAW came to the table on health care cuts, the union appears ready to fight GM's across-the-board downsizing of factory jobs.

"While GM's continued decline in market share is not the fault of workers or our communities, it is these groups that will suffer because of the actions announced today," Gettelfinger said.

He vowed to enforce job security provisions that protect workers in the event of layoffs. For his part, Wagoner expressed confidence that GM can shed jobs without violating its UAW contract.

 

By Christine Tierney / The Detroit News


The United Auto Workers reacted angrily to General Motors Corp.'s plan to slash nearly a third of its manufacturing jobs in North America, but the union is caught in a bind as it weighs the plight of its members against the automaker's struggle to recover.

"It's always tough for unions in that situation. They have a real stake in keeping American automakers viable and able to compete," said Zachary Hummel, an attorney specializing in labor law at Bryan Cave LLP in St. Louis.

"Both sides will differ on where to draw the line, but there's a realization at the UAW that they have to be careful about pushing too hard because they might end up with a worse situation than they have now," he said.

Rarely has the UAW faced such intense pressure as it does now, with the two biggest U.S. automakers losing money in North America and losing ground to Asian rivals led by Toyota Motor Corp. The UAW membership has dropped by more than half since 1980.

After giving GM breathing room by agreeing to a deal that would increase workers' and retirees' share of their health care costs, the UAW is under pressure now to give Ford Motor Co. and DaimlerChrysler AG's Chrysler Group similar concessions.

Ford plans to announce a deep restructuring in January -- its second in less than five years -- that will call for significant plant closings and jobs cuts.

The union already faces a tough adversary in the management of Delphi Corp., the largest U.S. supplier and onetime GM subsidiary that filed for bankruptcy in October. Delphi is seeking steep reductions in wages and benefits to restore its competitiveness.

Delphi Chairman Robert S. "Steve" Miller told The Detroit News he appreciates the dilemma facing UAW President Ron Gettelfinger and other union leaders.

"I don't underestimate the political problem they have in helping their membership make this transition," Miller said. Gettelfinger is up for re-election next year.

GM, which has lost more than $4 billion in North America so far this year, announced a restructuring plan Monday that would close five assembly and four component plants and downsize others. In all, 30,000 jobs will be eliminated.

Because the current labor contract bars GM from closing plants, it will idle some of them until it can negotiate the closures at the next contract talks in 2007.

"Today's announcement clearly makes those negotiations much more difficult," Gettelfinger said in a statement.

"There's going to be a very tough bargaining in 2007 about the future direction in which GM goes," said Harley Shaiken, a professor at specializing in labor issues at the University of California-Berkeley.

"The union wants to see a competitive GM -- their members' jobs depend on that. The long-term issue is, will we have a middle class with a more competitive GM? That'll be the issue in 2007," he said.

But the UAW will have a difficult time securing any job guarantees unless it softens its stance on the preservation of benefits and wages -- something it has been reluctant to do in the past, Hummel said.

"The challenge for the UAW is that, within any collective bargaining, a management retains the option to decide the size of the work force."

GM flagged the outlines of its restructuring plan in June, when Chairman and CEO Rick Wagoner told shareholders at the annual meeting that the automaker needed to cut 25,000 jobs in the United States and shutter plants.

At GM's engine plant in Flint, a town gutted by past restructurings, most of the workers have been there 30 years or longer and will be eligible for retirement. "Still, it's not easy for anybody concerned," said Phil Smith, education director at UAW Local 599.

Canadian employees were stunned to hear that one of plants slated for closure was a factory in Oshawa, Ontario, that was rated North America's highest-quality plant twice in the past four years by J.D. Power and Associates.

"It's a gem in GM's operations," said Basil "Buzz" Hargrove, president of the Canadian Auto Workers union. "If you're going to restructure and make money, why would you close your best plant?"

He said he would fight hard to secure early retirements, instead of layoffs, for the plant workers.

Union leaders said their members had cooperated closely with Detroit's automakers over the years to improve quality and productivity -- and were being penalized for poor strategic decisions.

"GM's return to prosperity depends on its offering products that consumers find attractive, exciting and want to buy," Gettelfinger said.

"Being successful in this regard is the exclusive responsibility of management."

 

What is happening is just what I have said numerous times, both on and off of CL. Auto mega-corporations have simply gotten too big. There is no reason why Ford and GM have to own so many European and Japanese companies.....it is ludicrous. GM and Ford could cure many of their problems if they will just turn loose of companies like Saab, Mazda, Jaguar (although Jag quality has improved under Ford ) , Volvo, etc........and let them go back to doing what they do (or DID ) best before Detroit started calling all the shots. Saab, especially, has been decimated by GM.....and so has Saturn, which was once a unique and not a mee-too GM division.

If GM would just stick to being GM they wouldn't be in this mess and have to be closing down so many plants. But they tried to buy the world and it is coming back to bite them. Same with Ford.

And...as for us.....the auto-enthusiast people.....we would probably get lots more interesting vehicles if they didn't have to share world platforms. And while world platforms no doubt lower design costs, they often drive away customers and cost money in lost sales.

ONE good thing that has got to help both GM and Ford........with gas prices back down near $2.00 a gallon instead of $3.00-$3.50, sales of profitable large SUV's may make somewhat of a comeback....but probably not to pre-Katrina levels. Like I said, some long-term changes were made, and that was one of them.

 

http://money.cnn.com/2006/01/05/news...s_gm/index.htm

More GM cuts, this time tech jobs
Newspaper reports carmaker will lay off 500, mostly engineers and designers, in Warren, Mich.
January 5, 2006: 8:34 AM EST

NEW YORK (CNNMoney.com) - GM plans to lay off 500 contract workers at its Warren, Mich. technical center on Friday, according to a report published Thursday.

The job cuts will effect mostly engineers and designers and are part of the automaker's efforts to slash costs at its North American operations, the Detroit News said.

"This is a very challenging time, and these are very difficult decisions for the company," GM spokesman Robert Herta told the newspaper. "It's all about aligning the work force with our business needs."

The company said the cuts are part of a previously announced plan to reduce its U.S. white collar work force by seven percent in 2006, the report said.

GM (Research) has been plagued by declining sales and market share and a downgrade in its bonds to junk status.

 

GM should hire / consult Toyota on how to run their company.