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Puck
The Texan
Joined: 05 Jan 2004
Posts: 5596
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 Tue Jun 07, 2005 1:02 pm GM to cut 25,000 jobs by '08 |
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| Quote: | GM to cut 25,000 jobs by '08
CEO says automaker plans unspecified number of plant closings.
June 7, 2005: 1:06 PM EDT
By Chris Isidore, CNN/Money senior writer
NEW YORK (CNN/Money) - General Motors Corp. is cutting 25,000 jobs and closing an unspecified number of plants over the next 3-1/2 years, CEO Rick Wagoner told shareholders Tuesday, as the world's largest automaker struggles to stem huge losses.
Wagoner, who is also chairman of GM, did not offer more details other than to say the troubled automaker needs to cut capacity by the end of 2008.
The 25,000 jobs represent about 17 percent of GM's U.S. work force, which includes 111,000 unionized employees and another 39,000 salaried staff.
Speaking at GM's annual shareholders meeting in Wilmington, Del., Wagoner said the company's goal is to trim capacity so that plants are running full out. He noted that the cuts announced Tuesday and other moves this year will reduce its production capacity to 5 million cars and trucks by year-end, down from 6 million in 2002.
GM (Research) stock rose about 2 percent following the announcement, giving a lift to the broader market. GM is one of 30 stocks in the Dow Jones industrial average.
GM also announced plans to buy more components from suppliers outside the United States, and reported it couldn't be sure it would win needed health care cost cuts from the United Auto Workers union.
A spokesman for the union wasn't immediately available for comment.
GM's UAW contract essentially forces it to pay union employees during the life of the contract even if hourly workers are laid off and their plants are closed. But those protections only run through September 2007, when the current four-year pact with the union ends.
GM spokesman Edd Snyder said the automaker has yet to reach any agreement with the UAW yet on the nature or the manner of the work force reduction.
GM may be able to handle much of the reduction by offering early retirement incentives, said David Cole, chairman of the Center for Automotive Research, an independent research group, estimating that more than 25,000 of the company's U.S. workers are near retirement age.
Cole said he was surprised that GM was ready to announce cuts of this magnitude at the Tuesday meeting, and suspected that union leadership was willing to go along with any voluntary staff reductions that GM is likely to use through 2007.
"I can't believe he'd make an announcement of that without labor being supportive of it," Cole said. "They (the union) are in a position where they are very vulnerable. Without strong employers, their job protections don't mean anything."
In fact a drop of 25,000 U.S. jobs for GM by the end of 2008 is not much steeper than the normal attrition rate the automaker's seen in recent years.
In January Wagoner told reporters at the North American International Auto Show in Detroit that attrition among hourly workers had been running about 5 percent annually, and about 2 percent for salaried staff.
If the work force kept to last year's attrition rates, there would be a reduction of 7,000 to 8,000 employees this year without any plant closings, and three more years of those kind of gradual trimming could achieve much if not all of the 25,000 reduction in active staff.
"As things currently stand, GM has too many brands, workers, managers, capacity, and bureaucracy," said Peter Morici, a business professor at the University of Maryland and a critic of GM's management who says the cuts announced Tuesday were too little and too late.
"Offered the challenge to rescue GM from the dusk heap of history, occupied by other formerly mighty icons like Bethlehem Steel, AT&T and Packard, Wagoner demonstrated he will not be making any history worth remembering," he said in an e-mail.
In his remarks, Wagoner noted GM is talking to the unions about the health care issue.
"In recent weeks, we have been in intense discussions with the UAW and our other unions focused on a cooperative approach to significantly reduce our health care cost disadvantage," he said. "All parties are working hard on it, in the spirit of addressing a huge risk to our collective futures while providing greater security and good benefits for our employees."
Wagoner's prepared remarks suggested that there are other options available if the union does not agree to changes, although he added, "I don't believe that it serves a useful purpose to speculate on that."
Weak sales, share price
Cole said the cuts are deeper than he expected at GM, but they solve only part of the major problems the company is facing.
"You've got the revenue side and the cost side," he said. "On the revenue side, you've got to still sell product profitably. But the important thing at this point is to define a trajectory to get them to sustainable profitability."
GM's sales have tumbled 7 percent for the first five months of the year, and the company has also been hurt by what Wagoner has called "fewer high profit SUVs, more lower profit cars."
Its share of the U.S. market has fallen to 25.7 percent from 27.2 for the same period a year ago.
While shares are trading up from the 12-year low they hit in April, they have not recovered from the hit taken in March when GM warned of a steep loss in the first quarter.
GM ended up reporting a loss of $839 million, or $1.48 a share, excluding special items, for the quarter. Despite the plans announced Tuesday, Wagoner's prepared remarks did not include guidance on when the company might turn a profit.
GM's weak stock price prompted veteran financier Kirk Kerkorian to make a tender offer for 5 percent of GM shares outstanding at $31 a share a month ago, on top of the nearly 4 percent he had purchased at a lower price.
That offer, which helped lift GM stock, expires Tuesday. Kerkorian has said he was making the purchase as an investment and, despite a reputation as an activist shareholder, he was not at the shareholders' meeting.
GMAC staying put?
GM's credit ratings were recently cut to junk-bond status by Standard & Poor's and Moody's, the nation's two leading bond-rating agencies, hurting GM's profitable finance unit, GMAC.
Since the credit downgrade, there has been some speculation that GMAC might be spun off to improve its credit rating while freeing up cash for GM. But Wagoner suggested the automaker intended to keep the finance arm.
"GMAC is a business that is very important to GM," he said. "Besides their steady contribution to our overall earnings and financial strength, GMAC provides significant support in the sale of GM's cars and trucks around the world, at both the wholesale and retail level."
"This 'hand-in-glove' working relationship between GM Auto and GMAC provides ample benefits to our dealers and our stockholders, and is critical to our ability to compete in the marketplace," said Wagoner.
But, he added, "We are now in the midst of a detailed study of the strategic options that are available to us."
What does Kirk Kerkorian really want from GM? Click here.
For top business headlines, click here. Top of page
Find this article at:
http://money.cnn.com/2005/06/07/news/fortune500/gm_closings/index.htm?cnn=yes |
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LightningBoy
Commodore
Joined: 09 Mar 2003
Posts: 1446
Location: Minnesota, U.S.A.
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| Tue Jun 07, 2005 1:44 pm |
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This is what happens when people buy foreign cars. Anyone who drives a foreign car can blame themselves for cutting another American worker.
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IntrepidIsMe
Pimp Handed
Joined: 14 Jun 2002
Posts: 13057
Location: New York
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| Tue Jun 07, 2005 2:17 pm |
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Ha! Now thats ignorant. In general, the American car market isn't all that advanced as far as technology and innovation compared to foreign cars. Sure, let's blame people for wanting more for their money, 
-------signature-------
"Nelly, I am Heathcliff! He's always, always in my mind: not as a pleasure, any more than I am always a pleasure to myself, but as my own being."
-Wuthering Heights
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LightningBoy
Commodore
Joined: 09 Mar 2003
Posts: 1446
Location: Minnesota, U.S.A.
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| Tue Jun 07, 2005 3:32 pm |
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It's true. Like it or not, buying foreign hurts Amercan workers. I blame consumers 100% for the American auto industries' problems.
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madlilnerd
Duchess of Dancemat
Joined: 03 Aug 2004
Posts: 5885
Location: Slough, England
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| Tue Jun 07, 2005 3:34 pm |
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But German cars are good...
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IntrepidIsMe
Pimp Handed
Joined: 14 Jun 2002
Posts: 13057
Location: New York
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| Tue Jun 07, 2005 3:36 pm |
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| LightningBoy wrote: | | It's true. Like it or not, buying foreign hurts Amercan workers. I blame consumers 100% for the American auto industries' problems. |
Yeah. You can buy an american car for 25 thousand with not all that many features, but you can get a foreign car for the same price, with more? Why wouldn't you. Blame the American auto industry, not Americans.
-------signature-------
"Nelly, I am Heathcliff! He's always, always in my mind: not as a pleasure, any more than I am always a pleasure to myself, but as my own being."
-Wuthering Heights
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LightningBoy
Commodore
Joined: 09 Mar 2003
Posts: 1446
Location: Minnesota, U.S.A.
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| Tue Jun 07, 2005 3:58 pm |
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| IntrepidIsMe wrote: | | LightningBoy wrote: | | It's true. Like it or not, buying foreign hurts Amercan workers. I blame consumers 100% for the American auto industries' problems. |
Yeah. You can buy an american car for 25 thousand with not all that many features, but you can get a foreign car for the same price, with more? Why wouldn't you. Blame the American auto industry, not Americans. |
If you feel that way, then I hope you lose your job when you go pinch pennys. Principle before pennys, and no, American cars are not THAT much more expensive, at least if you want to compare nice ones.
Funny, the kind of people to claim they care SO MUCH about unions and American Workers, are also the same kind of people who'll usually drive a Subaru, Honda, or Kia...
I never have, and never will own a car built outside of the NAFTA coalition.
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IntrepidIsMe
Pimp Handed
Joined: 14 Jun 2002
Posts: 13057
Location: New York
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| Tue Jun 07, 2005 4:11 pm |
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They're not more expensive, just not as innovative. You get more for your money in general, when you buy foreign. Lose my job, yeah, because the industry I work with can't compete? Why work there anyway? If the American auto industry is better, as you say, than why wouldn't all Americans buy only American cars? Doesn't seem to add up.
-------signature-------
"Nelly, I am Heathcliff! He's always, always in my mind: not as a pleasure, any more than I am always a pleasure to myself, but as my own being."
-Wuthering Heights
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Link, the Hero of Time
Vice Admiral
Joined: 15 Sep 2001
Posts: 5581
Location: Kokori Forest, Hyrule
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| Tue Jun 07, 2005 4:33 pm |
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| LightningBoy wrote: | | It's true. Like it or not, buying foreign hurts Amercan workers. I blame consumers 100% for the American auto industries' problems. |
Blame the Free-Enterprise system our government has used for years. It allows those foreign cars to come in cheaper so that the American Populous is more tempted to buy them.
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AndrewBullock
The Misguided One
Joined: 04 Jun 2004
Posts: 2112
Location: Kentucky. (North America)
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| Tue Jun 07, 2005 5:03 pm |
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Hmm... ineresting.
My uncle works at the Ford company. I don't know if you heard about them getting off for a week every month.. different story.. Oh! and my dad works at Toyota.
Anyway, I just hope the other workers who do get layed off can survive.
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"Our integrity sells for so little, but it is all we really have. It is the very last inch of us. But within that inch we are free"
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Puck
The Texan
Joined: 05 Jan 2004
Posts: 5596
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| Tue Jun 07, 2005 5:41 pm |
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I am not overly concerned. In the long run, I doubt the US will be overly affected. Clearly, if consumers are buying foreign cars, then there is a reason for that. Perhaps consumers are trying to go for the smaller, more fuel efficient foreign cars, than the common American SUV. I know that my mom is looking for a new car for us, and come to think of it, the only ones she has been looking at are foreign cars. She HATES our SUV, and she wants a smaller car, more fuel efficient. Also, some of them have better warranties. Or maybe it is just that the American cars are not as good. Still, the American industry will adapt. That is what Americans do, they assimilate and adapt ideas to use for ourselves. If they choose not to, then they have no one to blame but themselves. If you want to blame consumers, then perhaps you also want to reevalute the captialist system as well?
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webtaz99
Commodore
Joined: 13 Nov 2003
Posts: 1229
Location: The Other Side
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| Tue Jun 07, 2005 6:58 pm |
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It's not as simple as "foreign" vs "American" cars. NO major brand name car is built entirely in America, and many "foreign" cars are built with American components or in America.
The real problem is the parisitical "investors" and "directors" who consider human beings to be meat by-products of the business process. Business is supposed to be something people do. Instead we are done by it.
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"History is made at night! Character is who you are in the dark." (Lord John Whorfin)
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madlilnerd
Duchess of Dancemat
Joined: 03 Aug 2004
Posts: 5885
Location: Slough, England
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| Wed Jun 08, 2005 10:35 am |
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Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy.
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Republican_Man
STV's Premier Conservative
Joined: 26 Mar 2004
Posts: 14823
Location: Classified
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| Wed Jun 08, 2005 10:39 am |
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| madlilnerd wrote: | Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy. |
And humans are more important than the environment. Therefore, if it's bad for the economy, that takes precedence 
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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webtaz99
Commodore
Joined: 13 Nov 2003
Posts: 1229
Location: The Other Side
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| Wed Jun 08, 2005 11:26 am |
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| Republican_Man wrote: | | madlilnerd wrote: | Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy. |
And humans are more important than the environment. Therefore, if it's bad for the economy, that takes precedence |
We are part of the environment. Any culture that does not take that view is doomed.
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"History is made at night! Character is who you are in the dark." (Lord John Whorfin)
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Republican_Man
STV's Premier Conservative
Joined: 26 Mar 2004
Posts: 14823
Location: Classified
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| Wed Jun 08, 2005 11:27 am |
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| webtaz99 wrote: | | Republican_Man wrote: | | madlilnerd wrote: | Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy. |
And humans are more important than the environment. Therefore, if it's bad for the economy, that takes precedence |
We are part of the environment. Any culture that does not take that view is doomed. |
Well, yes, we're part of the environment, I shouldn't have worded my statement the way I did. What I meant is that the economy is more important than the environment. When something like Global Warming policies and extreme car policies greatly hurt the economy, we shouldn't be doing it.
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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webtaz99
Commodore
Joined: 13 Nov 2003
Posts: 1229
Location: The Other Side
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| Wed Jun 08, 2005 11:39 am |
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| Republican_Man wrote: | | webtaz99 wrote: | | Republican_Man wrote: | | madlilnerd wrote: | Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy. |
And humans are more important than the environment. Therefore, if it's bad for the economy, that takes precedence |
We are part of the environment. Any culture that does not take that view is doomed. |
Well, yes, we're part of the environment, I shouldn't have worded my statement the way I did. What I meant is that the economy is more important than the environment. When something like Global Warming policies and extreme car policies greatly hurt the economy, we shouldn't be doing it. |
We can live (and have lived) without "an economy" (I'm not really sure what people mean when they use that word, and I don't think they do either).
We cannot live (and have not lived) without an environment (once again, I think what we should say is "a healthy environment").
I'm not an "environmental whacko", but I don't think any "economy" justifies having to wear a spacesuit to go outside the house.
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"History is made at night! Character is who you are in the dark." (Lord John Whorfin)
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Republican_Man
STV's Premier Conservative
Joined: 26 Mar 2004
Posts: 14823
Location: Classified
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| Wed Jun 08, 2005 11:40 am |
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| webtaz99 wrote: | | Republican_Man wrote: | | webtaz99 wrote: | | Republican_Man wrote: | | madlilnerd wrote: | Don't get so worked up about the whole thing. It happened recently in Britain too. Rover has completely closed down. NO more Rovers will ever be made. Hundreds of thousands of people lost their jobs (including my best friend's dad)
I, for one, think that it's not that much of a bad thing because cars are bad for the environment... but it is bad for the economy. |
And humans are more important than the environment. Therefore, if it's bad for the economy, that takes precedence |
We are part of the environment. Any culture that does not take that view is doomed. |
Well, yes, we're part of the environment, I shouldn't have worded my statement the way I did. What I meant is that the economy is more important than the environment. When something like Global Warming policies and extreme car policies greatly hurt the economy, we shouldn't be doing it. |
We can live (and have lived) without "an economy" (I'm not really sure what people mean when they use that word, and I don't think they do either).
We cannot live (and have not lived) without an environment (once again, I think what we should say is "a healthy environment").
I'm not an "environmental whacko", but I don't think any "economy" justifies having to wear a spacesuit to go outside the house. |
Oh, I would not go as far!! I think that there should be regulations, of course, but NOT to the extent that it would greatly hurt the economy.
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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webtaz99
Commodore
Joined: 13 Nov 2003
Posts: 1229
Location: The Other Side
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| Wed Jun 08, 2005 11:45 am |
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Never the less, the belief that the economy is more important than the environment is damaging.
We are not gods, yet. And if our precious "economy" ever collapses (and that risk is always present if remote), a healthy environment is the only thing that will allow us to survive.
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"History is made at night! Character is who you are in the dark." (Lord John Whorfin)
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Republican_Man
STV's Premier Conservative
Joined: 26 Mar 2004
Posts: 14823
Location: Classified
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| Wed Jun 08, 2005 11:47 am |
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| webtaz99 wrote: | Never the less, the belief that the economy is more important than the environment is damaging.
We are not gods, yet. And if our precious "economy" ever collapses (and that risk is always present if remote), a healthy environment is the only thing that will allow us to survive. |
I'll give you that, however I think that forcing great change due do something like "Global Warming" that would hurt the economy is bad.
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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Jeremy
J's Guy
Joined: 03 Oct 2002
Posts: 7823
Location: Aberdeen, Scotland
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| Wed Jun 08, 2005 5:56 pm |
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Well, when you're paying billions of $ in repairing the damage from El Nino storms then I hope you're happy about the choices made, 
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borgslayer
Rear Admiral
Joined: 27 Aug 2003
Posts: 2646
Location: Las Vegas
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| Wed Jun 08, 2005 11:27 pm |
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American car designs are squared or rectangular looking in a way that is not so appealing. Like the Cadillac's we have now are ugly.
While on the other hand the "Foreign cars" especially those in Asia are much more rounder, smaller, and sporty looking. Which is very appealing to the buyer. On the plus side "Foreign cars" have more features like CD Players, Sun Roofs, and On board Navigations. Cars made by Nissan and Hyundai are cheaper than American cars but have the same features and more. They are also very fuel efficent.
The problem with GM is that they have focused most of their attention to SUVs rather than cheaper fuel efficient cars with lots of features.
So all of there profits drops and they have no choice but to cut jobs.
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webtaz99
Commodore
Joined: 13 Nov 2003
Posts: 1229
Location: The Other Side
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| Thu Jun 09, 2005 9:11 am |
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| borgslayer wrote: | American car designs are squared or rectangular looking in a way that is not so appealing. Like the Cadillac's we have now are ugly.
While on the other hand the "Foreign cars" especially those in Asia are much more rounder, smaller, and sporty looking. Which is very appealing to the buyer. On the plus side "Foreign cars" have more features like CD Players, Sun Roofs, and On board Navigations. Cars made by Nissan and Hyundai are cheaper than American cars but have the same features and more. They are also very fuel efficent.
The problem with GM is that they have focused most of their attention to SUVs rather than cheaper fuel efficient cars with lots of features.
So all of there profits drops and they have no choice but to cut jobs. |
Ford owns at least 20% of Mazda. And Mazda owns a chunk of Ford. And so on.
Another problem with GM is that they have LOTS of workers with pension plans causing them to pay out over 6 billion a year. That's a big drain on a company (and a parallel of what is happening to Social "Security").
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"History is made at night! Character is who you are in the dark." (Lord John Whorfin)
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Valathous
The Canadian, eh
Joined: 31 Aug 2002
Posts: 19074
Location: Centre Bell
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| Thu Jun 09, 2005 10:41 am |
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| borgslayer wrote: | | American car designs are squared or rectangular looking in a way that is not so appealing. Like the Cadillac's we have now are ugly. |
Evil! My dad's buying one of those new Cadillac's in August. I love it. 
25 000 jobs.... That's a lot. It's bound to do some damage, even if its only a blip in the economy, think of those 25 000 families that now need jobs...
And RM. Wow. That's really all I can say to your statement about the economy being a lot more valuable than the environment. Frankly, I enjoy the protection from the UV rays that the Ozone gives us, and enjoy tolerable tempertatures. And there's nothing like a nice deep breath of smog in the morning to wake you up! Gotta love that healthy, tasty smog!
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Puck
The Texan
Joined: 05 Jan 2004
Posts: 5596
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| Thu Jun 09, 2005 10:50 am |
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Yeah, that whole thing about the American economy, that basically, it is more important than the global climate was rather silly. You wonder why people have some reserves about liking America when our policy makers, basically come out and say the same thing, telling the rest of the world that, really, our economy is more important than the well-being of the world . I think we do need to make changes. And some of these changes, in my opinion would actually create new jobs, by opening new areas of research that at the moment, are not as in demand.
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