Pop quiz time: how many viability schemes has GM touted since it began asking for bailout bucks? Including today’s announcements (actual plan not yet released) General Motors has submitted no fewer than three new business models since it began receiving Treasury funds in mid-December. And that doesn’t even include the first two “requests” which were rejected by Congress before GM cut out the middlemen and started dealing directly with the guys who print the money. The progression of this parade of plans illustrates a single major theme: the slow, reluctant acceptance of some approximation of reality. Which includes confronting the fact that GM’s bloated payroll trades off with its viability. The Detroit News reports that GM now understands that it pays 21,000 more employees than it can support, and that these positions will be terminated. That’s 7,000 more job cuts than the last (February) plan called for. The December plan (now lost to the GM memory hole, but hosted at TTAC here (PDF)) didn’t call for job cuts at all because the bailout was all about saving jobs back in those days. The cuts amount to a 34 percent decrease in hourly employment, with plans to stabilize employment levels at 38,000 by 2011. GM’s hourly labor costs will drop from $7.6 billion in 2008 to $5 billion in 2010, as GM seeks to “lower its break-even point” according to CEO Fritz Henderson.
All those billions really went to good use.
When everything finally goes to hell, Gettlefinger will be laughing all the way to retirement.
34% reduction is a start, but 50% is probably closer to where they really need to end up.
In every respect, GM needs to be half its current size. That’s what the market will bear.
That will be like 1 active UAW member paying for 15 retired UAW members….
They wonder why their wage is going down? A Brotherhood? Really?
“from $7.6 billion in 2008 to $5 billion in 2010”
~$2.6b/pa saving doesn’t even come close to a blip on the interest bill.
How many of these 21K people will be getting full pay (with their unemployment and contract benefits)?
And for how long?
Just wondering how my tax dollars are being used…