General Motors lost $38 billion last year. And another $3.3 billion in the first quarter. By the end of this year, it’s going to lose a fourth of its U.S. workers.
John D. Stoll at The Wall Street Journal writes:
GM Sheds 19,000 Jobs Through Buyout Program
General Motors Corp. said about 19,000 hourly workers have accepted buyout or early-retirement offers from the company and most will leave its payroll by July 1.
The move will cut the auto maker's U.S. hourly work force by about 24%, and it comes as GM is preparing a number of additional cost-cutting moves to be announced next week at its annual shareholder meeting. The 19,000 acceptances met the company's expectations, a person familiar with the numbers said.
The new round of buyouts and early retirements means about 53,000 workers -- roughly half its hourly work force -- have agreed to leave the company since the beginning of 2006. ...
... GM hopes this latest attrition plan will help it save as much as an additional $5 billion in costs by 2011. The plan helps GM cut costs not only by removing workers who take home about $78 an hour in total compensation but by opening the door for new workers who will earn about one-third of what the departing workers made.
GM has earmarked about 16,000 of its factory jobs as eligible for this so-called second-tier wage rate.
An endangered American species – the unionized worker with a high school diploma and middle-class income – takes yet another hit. It surely won’t be the last.
Not all of GM’s woes can be chalked up to myopic company policies. Some can be laid squarely at the feet of consumers who until rather recently loved themselves the fuel-gulping Behemoths and Leviathans and Autosauruses turned out by GM and its brother companies Ford and Chrysler. And then, of course, there was Japan, Inc. in the shape of Toyota and Honda.
GM’s predicament would certainly be less dramatic if the United States weren’t the only country in the developed world without health coverage for all. But when Bob Lutz – the vice chairman and product development chief hired in 2002 to spark some new life into GM and help dig it out of its hole – spouts lines such as global warming is a "total crock of shit," and, in 2005, declared that diesel autos were no good for the U.S. market and the hybrid vehicles being made by Toyota "make no economic sense," you gotta wonder how many of those second-tier workers are going to have a job in a decade.
This is, you’ll remember, the company that killed the electric car, the EV1, with the help of a self-sabotaging marketing and leasing program. But there could be some hope. Lutz appears to be in love with the Chevy Volt, a plug-in hybrid unveiled in January 2007. GM’s marketers don’t call it a hybrid, but rather an electric car with a "range extender," perhaps out of deference to Lutz’s previous trashing of the breed. But its engineers know that a hybrid is what the Volt is since its range is extended by an internal combustion engine. It runs 40 miles on a lithion-ion battery and another 600 on 12 gallons of gasoline.
When the concept Volt was unwrapped in Detroit and four months later in Shanghai, the price tag was supposedly $30,000. Now it’s $48,000, or maybe, Lutz has said, $40,000. Originally, there were going to be 60,000 produced in the first year, slated for 2010. Now GM is talking 10,000.
If GM is serious this time – and $38 billion in the hole can make you very serious – perhaps it won’t after a few years of sly gaming wind up crushing the Volt the way it did all the EV1s. Given GM’s record over the past couple of decades, however, it would be foolish to count on this.
UPDATE: Some readers have assumed that GM workers are making $78 a hour. As the WSJ article notes, that is total compensation, which includes wages, health insurance, pension contributions and other items. Wages are well under half the total.
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