General Motors to Slash 30,000 Jobs, Shutter Plants
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris.
For months people in the auto industry have been waiting for General Motors to unveil its plan for shrinking the company back to profitability. Today the specifics of that plan were unveiled, and some said it was too ambitious; others say it was not aggressive enough; it all depended upon your perspective. The list of scheduled plant closings was read aloud this morning by GM CEO Rick Wagoner. He called the closings `difficult but necessary if the world's largest automaker is to be competitive.' We'll hear from an auto industry analyst in just a few minutes. But first, NPR's Jack Speer reports on the news of the day.
JACK SPEER reporting:
GM is on track to lose between 5 and $6 billion at its North American auto operations this year. But by closing as many as nine plants and eliminating roughly 30,000 jobs, CEO Rick Wagoner says the company hopes to reduce its costs by about $7 billion a year.
Mr. RICK WAGONER (CEO, General Motors): These actions are necessary for General Motors to get its costs in line with our major global competitors. In short, they're an essential part of our plan to return our North American operations to profitability as soon as possible.
SPEER: Wagoner said he hopes to achieve most of the job cuts through attrition and early retirement, though he wasn't able to offer specifics on exactly how many workers would have to be induced to take a buyout.
Mr. WAGONER: I can't really give any guarantees, but I can assure you and everybody else that a lot of work went into this; our smartest people looking at everything we could. And we think this plan is comprehensive and is going to address what we need to address.
SPEER: One reason Wagoner may have been a little light on specifics is because GM's biggest union, the United Auto Workers, still has to weigh in on the job cuts. While GM can close plants, it may not be off the hook for salaries. David Healy is an auto industry analyst at Burnham Securities. He says that's because the UAW's current contract with GM doesn't expire till 2007.
Mr. DAVID HEALY (Burnham Securities): And they can shut them down, but their employees will receive nearly full wages for doing nothing until the basic labor contract is renegotiated about two years from now.
SPEER: And while GM has been meeting with the UAW, the statement issued by union officials today was fairly defiant. The UAW leadership criticized GM management for trying to shrink the company to prosperity and called the restructuring plan `disappointing.' The statement went on to say, `Any job cuts will be the subject of ongoing discussions and negotiations between the UAW and GM.' Dan Fairbanks is president of Local 1618, UAW Local in Lansing, Michigan, home of one of the GM plants targeted for closure.
Mr. DAN FAIRBANKS (President, Local 1618, UAW Local): What's going to happen now? That's the question everybody's got. You know, it's--what's going to happen? We could be working all the way to June or July of '06 or whenever. We just don't know right now. And so there's a lot of questions that are out there that we're going to try and get answers for.
SPEER: GM's stock is down nearly 40 percent over the last year and barely budged on the news today. Many Wall Street analysts are taking the position that while the steps taken today are necessary, they may not be sufficient. Efraim Levy is senior automotive analyst at Standard & Poor's.
Mr. EFRAIM LEVY (Standard & Poor's): I was just really expecting something more dramatic out of this. It just seems to be more of an incremental cut. And I think that, you know, not only is it a matter of how big, but they also still have to achieve it, and that's not a done deal. And if they lose further market share, this may not be enough.
SPEER: For all its woes, GM is still the largest carmaker in the world, but its continuing loss of market share has many analysts wondering if this will be the year Toyota overtakes GM in terms of overall production. GM plans to close assembly plants in Oklahoma City, Lansing, Michigan, Doraville, Georgia, and Ontario, Canada, by the end of 2008. Jack Speer, NPR News, Washington.