Wagoner announces GM layoffs

[IMPALAon20s]

source:cnn

GM to cut 25,000 jobs by '08
CEO says automaker plans unspecified number of plant closings.
June 7, 2005: 10:33 AM EDT

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.

He said the company's goal is to trim U.S. capacity so that the company is running its plants full out.

Shares of GM (Research) rose nearly 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.

Wagoner said GM is committed to trying to win union approval for health care cost cuts under the current labor contract but added that he couldn't promise shareholders he'd be successful.

"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 said that, for now, GM is committed to trying to cut health care costs in cooperation with the union. His prepared remarks did suggest 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."

GM's credit ratings were recently cut to junk-bond status by Standard & Poor's and Moody's, two leading bond-rating agencies.

[IMPALAon20s]

this is result of pole on same page of that article, asking what would be needed to turn GM around. limited options i think.

More job cuts 8%
Better cars 63%
New management 21%
A merger 7%

[mk1700]

Wagoner said that, for now, GM is committed to trying to cut health care costs in cooperation with the union.

Cut helt care costs? Just cut the Union. Thats all!

[IMPALAon20s]

wish that pole would have had options of "cut out UAW" and "open peoples eyes to the truth about gm products".

UAW has had it too good for too long, they have benifits well above national standard, and yet they feel they have right to these benefits. for example just recently the UAW allowed DCX to require employees to pay $5-10 deductible for dr vists. while the rest of us have been paying deductibles for years, and some of us are up to $35 a visit now. If domestic automakers ever had an entity to blame, i'd put it square on the shoulders of the greedy UAW that has a strangle hold on them. With current laws in place, and OSCA monitoring worker safety, the union is something of the past. it use to be that the union was the small guy fighting a huge corporation, but now its sole purpose is to demand every penny out of companys and nothing more.

[FordWho?]

Originally Posted by IMPALAon20s

this is result of pole on same page of that article, asking what would be needed to turn GM around. limited options i think.

More job cuts 8%
Better cars 63%
New management 21%
A merger 7%

I saw this on CNN.com. I'm suprised how many people still think GM makes horrible cars. I know there have been some real turds in the past few years but it looks like they're turning the corner w/ some new exciting rides:

Solstice
G6 Coupe / Vert
H3
HHR??
Colbalt
Monte Carlo SS
(I wish I could add Camaro : )

I hope eventually they can shed the misconception and get back on track.

[saturnsteve]

Originally Posted by IMPALAon20s

this is result of pole on same page of that article, asking what would be needed to turn GM around. limited options i think.

More job cuts 8%
Better cars 63%
New management 21%
A merger 7%

Yeah no kidding, ["IF YOU BUILD IT THEY WILL COME" IDIOTS!!!

[johnny smallblock]

In that poll, if a choice had been "Wear Fake Moustaches To Boost Morale" 10% of people would vote for that.
How about an option that says "Get People to Realize What Great Cars GM is Making Right Now"

[Tico]

It's the products stupid! We all know that. DCX has the union to contend with (maybe worse in Europe) and they are making money. Chevy has a great small and midsized car. They need a good large FWD car with AWD option to compete with the imports and a good RWD sedan and Coupe combo to compete with Ford and Dodge. Then Chevy cars are done. The plan to fix Pontiac / Buick / Saturn sounds good if they can execute truely "unique personalities" for these divisions that go head to head with their import competitors. Cadillac just needs to build on what it is already doing. I can't comment on SUVs / Trucks since that is not my thing.

Sounds so simple doesn't it?

[dav305z]

We'll have to see. This is very important to freeing up money. However, nothing at GM will change if they just pocket the money they save and don't start improving their product.

[tripowergto]

Sounds like GM has a plan to put SERIOUS leverage into their next UAW negotiations in Sept 07. "Give us Health care relief or 25,000 will lose their jobs WITHOUT 95% lay off pay. Strike if you must as we(GM) are doomed without this relief!!" Woo Bay-bee!!

[Pro GM and Ford]

Tico wrote: "DCX has the union to contend with (maybe worse in Europe) and they are making money."

No, I think in Europe, the government's socialized medicine programs, not DCX, pays the exorbitant health care costs

[mjd1001]

Leverage is a key isssue here. I'm sure a strike would still shut down most of GM's operatoins if things get ugly, but it may not be 100% crippling like it would have bee 10-15-20 years ago.

Now more than then, GM has more parts produced oversees, engines (GM just announced last week I think of building more engine plants in China..and the 3.4 is built there already), and some cars are even totally produced in other countries (Canada and Mexico). Lets not forget about Holden in Australia, where the GTO comes from.

By late 2007-2008, GM may be able to produce a trickle of cars even if the unions shut down North American operations. If not...like someone else said...they are close to losing money on their cars now...if the workers strike...then they don't have to pay them.

[IMPALAon20s]

i say let UAW contract expire, wish it would expire sooner. and let them strike, public wont have sympothy for them with their greedy attitude. even wagner sounded like he doesn't expect uaw to compramise with him.

[stevews602]

Where is the plan?
Is it really "lets keep shrinking the company"?
The Unions are a small part of the problem; the real challenge is producing products everyone wants to buy. GM needs to fix their product mix and marketing big time.
They need a bold plan to excite consumers and it's workforce. Killing off projects and shrinking the company without a plan doesn’t make sense to me.

GM management made this mess, I’d make them the first of the 25,000 out the door.

[x2222]

Originally Posted by saturnsteve

Yeah no kidding, ["IF YOU BUILD IT THEY WILL COME" IDIOTS!!!

But you can make the case that they can't build it without more cost cutting. GM can't win a high volume, competitive segment anymore so theyre not even trying (zeta - r.i.p.).