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GM to Ax 30,000 Jobs, Close 12 Sites

Date: Monday, November 21, 2005
By: Dee-Ann Durbin, AP Auto Writer



DETROIT (AP) - General Motors Corp., pounded by declining sales and rising health care costs, said Monday it will cut more than a quarter of its North American manufacturing jobs and close 12 facilities by 2008. The United Auto Workers called the plan "devastating" and warned it will make negotiations more difficult, but some Wall Street analysts said GM's actions may not go far enough.

To get production in line with demand, GM will cut 30,000 jobs, which represent 17 percent of GM's North American hourly and salaried work force of 173,000, and will close nine assembly, stamping and powertrain plants and three parts facilities. GM's U.S. market share fell to 26.2 percent in the first 10 months of this year compared with 33 percent a decade ago, the result of increasing competition from Asian rivals. GM lost almost $4 billion in the first nine months of this year.

"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," GM Chairman and Chief Executive Rick Wagoner said. "But these actions are necessary for GM to get its costs in line with our major global competitors."

GM isn't the only U.S. automaker cutting costs. 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.

GM said the plant closings are part of a plan to shave $7 billion off its $42 billion annual bill for operations by the end of next year. That includes a $3 billion cut in health care costs, $1.5 billion in manufacturing cuts and $1 billion in savings on materials.

Standard & Poor's Ratings Services, which lowered GM's debt to "junk" status earlier this year, said the company remains on credit watch. S&P said the staff cuts are substantial but may not be adequate considering GM's problems, including a possible strike at Delphi Corp., its largest supplier; an ongoing federal investigation into accounting errors; and an uncertain outlook for its new lineup of full-size sport utility vehicles, which may fall victim to consumer concerns about gas prices.

Goldman Sachs analyst Robert Barry said those headwinds could offset any gains from the cuts.

"We are not confident the restructuring addresses the core issue that GM brings too much supply to the North American market," Barry said in a note to investors.

GM has 77 facilities in North America, including 30 assembly plants, 23 stamping plants and 24 engine and transmission plants, spokesman Stefan Weinmann said.

Wagoner said the job cuts will come primarily through attrition and early-retirement packages to mitigate the impact on workers. GM has an annual attrition rate of about 7 percent, Wagoner said. The average hourly worker is around 49 years old, he said.

Some workers who don't choose to retire could go into jobs banks, which pay laid-off workers their salary and benefits. Wagoner said details about layoffs and early-retirement packages still need to be worked out with the UAW, the Canadian Auto Workers and other unions.

Earlier this month, GM's U.S. hourly workers agreed to pay more for their health care benefits, a concession UAW leaders said was necessary because of GM's financial status. But the union responded angrily to GM's latest announcement, saying the company needs to design attractive and exciting vehicles instead of trying to shrink its way to prosperity.

"Workers have no control over GM's capital investment, product development, design, marketing and advertising decisions. But, unfortunately, it is workers, their families and our communities that are being forced to suffer because of the failures of others," UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement.

The plan will cut the number of vehicles GM is able to build in North America by about 1 million a year by the end of 2008. GM will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Wagoner said GM's plants are increasingly flexible and will be able to add capacity to meet market demands.

The decrease could help Toyota Motor Corp. surpass GM in worldwide production, although it's unclear if that could happen, because GM is growing rapidly in Asia, said Greg Gardner of Harbour Consulting, a manufacturing consulting firm. Toyota expects to products 8.1 million vehicles this year, while GM expects to produce 9 million, he said.

Wagoner said the plan would get GM's North American plants running at 100 percent of their capacity rather than 85 percent, as they do now. In 2004, Toyota had the most productive plants in North America, with six plants that ran at 107 percent of their capacity, according to the Harbour Report, which measures manufacturing productivity.

The plants that are closing make a variety of vehicles. GM didn't target plants where it makes full-size trucks and SUVs, products it's counting on for a comeback. Instead, it's significantly reducing its capacity to produce minivans like the Buick Terraza, mid-size SUVs like the GMC Envoy and mid-size sedans like the Buick LaCrosse. It's also ending production at the Lansing plant that produces the slow-selling Chevrolet SSR, a small pickup.

Wagoner said GM has no plans to kill off any of its eight brands. He added that plants were chosen for closure based on overcapacity of their products in the market, the life span of various products and the state of the facilities.

"Frankly, we've done it in the fairest and most cost-effective way we could do it," Wagoner said.

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

An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.

Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore. One other site will to be announced later.

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 cow. It could be facing a strike at Delphi, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and may be liable for billions in pension costs for Delphi retirees.

Last week, after the automaker's shares fell to their lowest level since 1987, 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 repeated that Monday, and added that he continues to have the board's support and hasn't considered stepping down.

"I have given no thought to anything but turning the business around," Wagoner said. "I wasn't brought up to run and hide when things get tough."

Wagoner said the job cuts are part of a larger restructuring plan that includes the possible sale of a controlling interest in General Motors Acceptance Corp., GM's profitable finance arm. Wagoner said bankruptcy talk hasn't affected those plans and the company has had conversations with some possible buyers.
 
 BLACK by NATURE, PROUD by CHOICE.
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quote:
Originally posted by Isome:
This is not about labor unions, this is about poor management and trying to sell cars to a population that has too many relying on wages from the service


Do you see what I am talking about Isome?

Your rhetoric often has LITTLE basis on the real world but more on your "religious beliefs".

As I drive to work I make a mental note of all of the Japanese, Korean and German cars that I see on the road. As I am stopped at a traffic light I make note of the sequence of American cars that I see in a row. The number is dwendling.

General Motors as a company is structured to produce a certain amount of cars each year. When their cars are not selling their SUPPLY CHAIN gets congested with unsold cars and the backflow disrupts the stream of production.

THIS IS A CORRECTION TO THE REAL WORLD EVENTS.

GM is not selling the number of cars to justify their current production capacity. They are losing market share to THE OTHER SOURCES LISTED ABOVE.

While we applaud the opening of the Toyota plants around the country, the new Hyundai plant in Alabama, etc AS THIS REPRESENTS GROWTH IN THE PRODUCTION CAPACITY OF THE US AUTO MARKET we must also be mindful that any OVERPRODUCTION will be seen as a large inventory of unsold cars and thus financial losses for the car companies who's production costs are greater than their SALES of cars.

They made a short term adjustment by offering the EMPLOYEE RATE programs to get rid of inventory.
They will make a long term adjustment by REDUCING PRODUCTION.

It is interesting that the best that you can come up with is the claim of "management problems" and are satisfied that you have acheived an understanding of the hard facts that are before all of the domestic auto makers.

Such a generic discription is tantamount to saying "I have a sharp pain in my side. I need to rest" when in fact you are suffering from kidney failure UPON CLOSER INSPECTION.

Please start INSPECTING rather than just talking.
quote:
Originally posted by Constructive Feedback:

Do you see what I am talking about Isome?

Your rhetoric often has LITTLE basis on the real world but more on your "religious beliefs".


I really don't have the patience for your gobbledygook this morning P.A.N. (that's your new name). Give me the facts only, don't go rambling on because you're not coherent.

I back up what I say. You just talk, talk, talk, talk, talk loud and say nothing, and back it up with even less than nothing.
http://quote.bloomberg.com/apps/news?pid=10000103&sid=a...aPY&refer=news_index

US Auto sales expected to fall AS SALES OF ASIAN MADE CARS INCREASE.


CLEARLY the American consumer is not worrying much about how their auto purchasing decisions as consumers as they are impacting their unionized brothern who are taking it on the chin with regards to job losses and cuts in their benefits.

The fact that many of the Japanese auto manufacturers who have production facilities set up in the Untied States and make use of a NON-UNION work force as they go to Southern "right to work" states doesn't seem to make much impact in the show rooms as Americans consumers seek to purchase the car that they want BUT NOT THE ENTIRE PACKAGE that is represented by the car and it's manufacturer.

(But of course - it is just Bad Management Decisions in the mind of some.)
I bought a Hyundai Excel. I bought it used and payed cash. I have never owned a new car.

36 years after the moon landing and the only major economist I know of who has said anything about planned obsolescence is John Kenneth Galbraith and that was back in 1959. 10 years before the moon landing.

200,000,000 cars in the US. Figure $1,500 in depreciation annually per car. That's 300 BILLION DOLLARS per year. DOWN A RAT HOLE

umbra
I think that number is deceptive. The auto industry has many older workers and many of the job losses will come through attrition....not replacing retiring workers. There will be people who will lose jobs as plants close, but the numbers are deceptive.

I think that the problem with GM is that they focused to much on lucrative Gas guzzling vehicles like SUV and Trucks and not enough on their car line. The SUV and Truck market was the last bastion of American domination until recently. GM rode out that wave to profitability as long as they could...without being more innovative and competitive in its car design. Now that foreign auto makers are doing well in the SUV and truck Market and now the gas prices makes these vehicles less desirable, GM is taking a hit.

Another thing is that GM PAYS GOOD in wages, salaries and benefits and this makes them less competitive in pricing.
quote:
Originally posted by Noah The African:
I think that number is deceptive. The auto industry has many older workers and many of the job losses will come through attrition....not replacing retiring workers. There will be people who will lose jobs as plants close, but the numbers are deceptive.

I think that the problem with GM is that they focused to much on lucrative Gas guzzling vehicles like SUV and Trucks and not enough on their car line. The SUV and Truck market was the last bastion of American domination until recently. GM rode out that wave to profitability as long as they could...without being more innovative and competitive in its car design. Now that foreign auto makers are doing well in the SUV and truck Market and now the gas prices makes these vehicles less desirable, GM is taking a hit.

Another thing is that GM PAYS GOOD in wages, salaries and benefits and this makes them less competitive in pricing.


How astute Noah! All the articles on this subject say the same things. Poor management, downsizing and retiring employees that will affect their ability to meet pension obiligations and day-late-and-a-dollar-short decision to jump on the hybrid, fuel efficient band wagon.

Thanks for proving my point by just being you!

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