GM to Cut North American White-Collar Workers

[Wes Bucey]

1. So how will this news affect the rest of the GM supply chain?
2. Will this mean cutting Supplier Quality Analysts (auditors, etc.)?
3. If GM is laying off folks, are they also cutting way back on their purchases?
4. Is GM overstaffed? (Will job cuts have big or small impact in operations?)
5. If the white collar guys get cut, what happens to the hourly wage earner?
6. Will we even hear about job cuts lower in the supply chain?

GM to Cut N.American White-Collar Workers
NEW YORK (Reuters) - General Motors Corp. (NYSE:GM - news) plans to cut its North American white-collar work force, the Wall Street Journal reported on its Web site on Sunday, less than a week after the automaker warned that 2005 earnings would fall short of its target.

The cuts in salaried staff could be as deep as 28 percent in certain functions, according to the newspaper that cited industry officials and analysts. The paper did not specify a time frame for the cuts, nor did it provide an overall number for the expected job cuts.

"We've had a fair amount of natural attrition for a while," said GM spokeswoman Toni Simonetti, "From time to time we've accelerated attrition. But there's no broad based across the board target."

In some areas of the business, the company is looking at reductions of as much as 28 percent, she added, but noted that those cuts were in the works prior to last week's profit warning.

The company said last week that earnings this year would be 80 percent below its prior forecast as a result of slumping North American auto sales.

The newspaper called the cuts a prelude to health-care concessions that GM would seek from its largest union, the United Auto Workers (news - web sites).

Asked if GM has opened negotiations with UAW, Simonetti said, "Suffice it to say, we have an ongoing and open dialogue with the union."

[cncmarine]

The rest of the supply chain has known for years that the future of the automotive market is overseas. I’m happy to see that the 5 – 6 % that every company gives them. each year is working.

“The company said last week that earnings this year would be 80 percent below its prior forecast as a result of slumping North American auto sales. “

Unbelievable !!!!!!

80 % below its forecast….what year is it 2001…Do they think it’s a telecom company.

[Marc]

It will affect businesses which do business with GM, but not any more so than is happening all across the US at *most* businesses - Even those unrelated to GM. So no - I don't think it's a GM phenomena.

It's just an aspect of the increasing flow of business out of the US. For the first time since the early 1930's, over the last 4 years there has been a net decrease in jobs in the US. I believe this trend will continue for years to come.

In my opinion, '... you ain't seen nuthin' yet ...'. If this surprises anyone, they haven't had their eyes open for several years or more.

[Kevin H]

My WAG, based upon personal experinece of the downturn in the industrial gas industry in the 1989 recession - cut the engineers, development is an extended period activity & they can be reduced with immediate positive impact to the bottom line and negative impact (slower introduction of new models, possibly poorer quality planning, etc.) is delayed for 1 or 2 years. Then you can replace them with new engineering graduates/less experienced engineers for a long term cost saving.

Count me as slightly cynical, and wondering when/if this will stop at some reasonable point.

[Marc]

The question is - What is a "reasonable" point and by whose definition?

And.... China is just getting into the automotive market here in the US and from what I've read they will be selling their cars at about 30% less than comparable cars sold here already with comparable quality. Are the US auto manufacturers, for all intents and purposes, ready for their final decline into oblivion? Not to mention automotive suppliers? Not to mention TS 16949....

[David Hartman]

I guess that I'm viewing this from a little different perspective. I see this announcement as a good thing (can you tell that I'm NOT a GM white-collar worker).

GM for years has had one of the fattest, most over-bloated, bureaucracies in the world. Change, if it happened, was slow to non-existent unless it was directly arrived at by and driven from the top of the heap (e.g. changes in Pontiac since the arrival of Robert Lutz). With all of the bureaucratic layers that suggestions had to go through, it took a crisis before things could happen.

By eliminating some of this bureaucracy this should allow the voice of the workforce to be better heard, as well as eliminate some of the weightier overhead that this company has had to deal with for years.

It's about time that GM started to deal with the REAL issues, instead of putting more of their hourly employees on the unemployment line. Increasing "productivity" can only gain you so much, if you haven't dealt with the boated management structure.

[SteelMaiden]

I mostly agree with you David, I just hope that the ones who will be leaving are the ones who create the "bloat" and sluggishness. But being the sarcastic cynic that I am, somehow I think the ones who cause the most problems are usually the ones who know how to play the game.

[cncmarine]

Well when you miss something by 70% then somebody should lose their job.
Unfortunately it will be the line workers and the Tier one, two, and three plants that stretch across the United States.

The sacrifice, the cuts, and the paperwork that is needed to keep these automotive contracts are never ending. This isn’t about the white collar worker in Detroit losing his/her job. It’s about small companies from Massachusetts to Illinois closing their doors.

Think about the amount of inventory that has been built!


The writing was on the wall for two years. The price of gas is over $2.00 a gallon, the country is at war and GM thinks we all need to have another SUV. Mean while proactive companies have a waiting list a mile long for smaller Hybrid vehicles.

But what do I know I’m just a grunt.