Janesville56.2°

Quarter of GM hourly staff leaving, but is it enough?

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McClatchy Tribune and Gazette Staff
May 30, 2008
— More than a quarter of General Motors hourly workers are expected to leave by the summer as a result of a recent buyout and retirement offer, the company said amid reports that Chairman and CEO Rick Wagoner will announce additional restructuring measures at the company’s annual meeting Tuesday.

It’s uncertain whether those new measures will involve GM’s assembly plant in Janesville, where a 35 percent cut in production already is scheduled to take effect in July, when the second shift is eliminated.


GM said Thursday that 19,000 of its 73,000 hourly workers have signed up for buyouts and retirement offers. Workers will be expected to leave by July.


While the number leaving is far higher than that of a similar program at Ford Motor Co. earlier this year, it is a bit below the number GM targeted under its special attrition program offers, also called the SAP.


“We had hoped that 20,000-25,000 would take the SAP at GM—setting up at least 12,000 hires this fall,” said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. “I think GM assumed this also. So GM is much closer to its target than Ford.”


Ford saw about 4,200 take its offers, but had hoped to entice 10,000 hourly workers to leave, he said.


Both automakers had hoped to use the buyout and retirement offers to move their older workers off the payrolls. Both automakers say they have more workers than they need given the growing competition and their shrinking market shares in the United States.


GM has not released plant-specific numbers for the SAP, but sources have told The Janesville Gazette that about 600 of the Janesville plant’s 2,400 workers will leave the facility. The 25 percent take-rate in Janesville mirrors the national rate reported by the automaker Thursday.


McAlinden said GM had hoped to have enough workers take the buyout and retirement offers that it could not only trim its workforce but also take advantage of a clause in the most recent UAW contract that allows the automaker to hire new workers at a lower hourly wage and with a lesser benefits package.


“This attrition program gives us an opportunity to restructure our U.S. workforce through the entry-level wage and benefit structure for new hourly employees,” Troy Clarke, president of GM North America, said in a statement. “We appreciate the UAW’s support in making business improvements that provide a more secure future for General Motors and its employees.”


GM’s latest buyout brings to about 53,000 the number of hourly workers the automaker has cut in the past two years as part of a North American turnaround plan that has cut $9 billion in fixed costs, but has yet to return the automaker to positive cash flow or profitability.


In light of those struggles and mounting pressures from rising gas prices, a weak U.S. economy and a rapid and ongoing shift in consumer preferences to cars and crossovers from large trucks, Wagoner is expected to unveil a new restructuring plan at the automaker’s annual meeting on Tuesday.


People familiar with the planning said the latest restructuring measures are likely to include production cuts for pickups, large SUVs and mid-size trucks and news of increased production for its cars and crossovers.


Earlier this year, GM announced that it will cut second shift production and up to 750 jobs in Janesville because of sagging sales of the full-size SUVs built here and at plants in Arlington, Texas, and Silao, Mexico. The automaker, however, has not announced any cuts for the Silao or Arlington plants.


“GM MUST cut light truck capacity,” McAlinden told the Detroit Free Press in an e-mail.


GM still has the capacity to build 1.7 million of its largest vehicles, from Escalades to Silverados, in North America, McAlinden said. “They probably only need 1 million units at most due to the structural change in the market. … So, we worry. Pontiac East, Flint Truck & Bus, they are all at risk.”


When asked specifically about the Janesville plant, McAlinden said in an e-mail to the Gazette that the local plant is much closer to GM’s major truck component plants in Indiana, Michigan and Ohio than the Arlington plant.


“Janesville Assembly and Local 95 have received a strong product renewal guarantee in the new national agreement ratified last fall,” McAlinden said. “Any further speculation is dangerous.”


That guarantee, however, is subject to market and economic conditions, neither of which is good.


“The truck market is collapsing—permanently,” he said. “The boom has gone bust.


“GM should have been better prepared, and we all know it.”



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