June 8, 2005
PASSING THE BUCK (JARRETT):
GM to Slash Payroll in U.S.: The slumping carmaker plans to cut 25,000 jobs and close several plants but still must figure out how to get more people to buy its vehicles. (John O'Dell, June 8, 2005, LA Times)
General Motors Corp. said Tuesday that it would eliminate 25,000 U.S. manufacturing jobs and close several factories over the next three years to revive its sagging North American auto operations.Posted by Orrin Judd at June 8, 2005 8:46 AMBut many Wall Street analysts offered only a tepid response to the plans, saying they were vague and did not go far enough to address a key problem: a lackluster lineup of cars that continues to lose sales to the offerings of Asian carmakers.
"These plans are not surprising given [GM's] market share losses and efficiency gains," said Goldman Sachs analyst Robert Barry. "If market share continues to fall over time, as we expect, then GM is really just treading water with such actions, not boosting profitability."
Unionism - a self-limiting phenomenon...
Posted by: M. Murcek at June 8, 2005 9:01 AMMM:
You are correct but that is only part of the problem. If I were setting the restructuring targets I would want between 35% - 50% of the cuts to come out of the non-union ranks. The bloated and ossified bureaucracy at GM is at least as large a part of the problem as the UAW. There are entire departments that GM could eliminate and nobody would notice after a couple months. At least the union guys are making cars. The bureaucracy is in large part just making work for each other.
Posted by: Jeff at June 8, 2005 9:20 AMAnybody know is there a division within GM that could profitably be peeled off and run as a separate company or are they all too integrated. You'd have to think keep Saturn, Cadillac, GM trucks and the Corvette and let the remainder sink.
They are all Chevys. Might as well stop selling everything that isn't a Chevy.
Posted by: AML at June 8, 2005 10:54 AMTheir outstanding pension and health benefit obligations are so much bigger than the company's worth that only its name is keeping it afloat.
Posted by: oj at June 8, 2005 11:13 AMWhen most of your profit is being plowed into retirement and health benefits, it's time to make it official: get out of the car business and into the welfare business.
GM won't exist in 5 years. Its workers/retirees will have to find a new teat to suckle from. Probably the US taxpayers.
Posted by: John J. Coupal at June 8, 2005 3:17 PMThey should set themselves up for the bankruptcy restructuring by investing big in the car business now. Get rid of Buick & rationalize production and models. Then the company that comes out of bankruptcy will be stronger.
Posted by: pj at June 8, 2005 8:06 PMthe gm board should dissolve the company, sell the assets and invest the proceeds (if there are any after paying off debts) into Google and Amazon stock.
Posted by: cjm at June 8, 2005 11:36 PMThat's the point, the proceeds would be a fraction of the outstanding obligations.
Posted by: oj at June 8, 2005 11:41 PM