GM Will Slash Global Work Force by 14%

GM World Headquarters




This has been plastered all over the news today, but I thought I would add it here as well. In order for General Motors to submit its viability plans to Congress on February 17th, the company felt it needed to clean house somewhat. 10,000 salaried employees will bite the dust this year, with most of them gone by May 1st. One has to wonder whether the once proud company had too many white collared workers to begin with.

Of course, this is the worst time ever to put people on the streets, with the national unemployment figures hovering around 8%. GM is also offering early buy-outs for retirement eligible employees. The question is, "Will this move be enough to insure that GM gets its next round of government funds?"

From Automotive News:

General Motors, facing a Feb. 17 deadline to show the government it's a viable company, said today it will cut 14 percent of its salaried jobs globally by the end of the year and temporarily slash the pay of many who remain.

Salaried employment will drop to 63,000, from 73,000, the company said in a statement. In the United States, about 3,400 of GM's 29,500 white-collar employees will lose their jobs, and most of those will be eliminated by May 1. As many as 4,000 of the 10,000 positions targeted in today's announcement will be in Europe. The other cuts will come from other regions in the world.

The cut in base pay for U.S. executives will be 10 percent. "Many other" salaried workers will have their pay reduced by 3 percent to 7 percent, GM said. The reductions take effect May 1 and continue through the end of the year.

"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in the statement.

Next week, GM must submit a plan to the Treasury Department to preserve its promised $13.4 billion in federal loans.

In its restructuring plan delivered Dec. 2 to Congress, GM said it expected to reduce U.S. employment levels from about 96,000 to between 65,000 and 67,000 by 2012, including both salaried and hourly workers. GM has not disclosed its target for global job cuts.

GM is currently offering buyouts to all U.S. hourly workers, 22,000 of whom are eligible for retirement. Chrysler LLC is doing the same.

Since 2000, the Detroit 3 have cut more than 250,000 jobs -- half of their employees. About 142,000 of those moves have come since 2005, and the Detroit 3 eliminated nearly 54,000 North American positions last year -- almost 18 percent of their combined workforce in the region.

Chrysler cut the most jobs in 2008, slashing its North American workforce by 31 percent to have nearly 53,000 employees. Ford Motor Co. pared 15.5 percent off its total work force last year to finish with 75,200 employees. Last year, GM cut 11.5 percent of its North American labor force.