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12-23-04, 02:06 AM
Friday, December 10, 2004
Automaker, unions agree to eliminate up to 12,000 workers to curb losses and save $665 million a year.
By Ed Garsten / The Detroit News
General Motors Corp. reached an agreement with major unions to cut up to 12,000 jobs at its European operations, including a 15 percent reduction in management posts, to stanch steep financial losses.
Union officials involved in the negotiations said the cost of the early retirement buyouts over the next two years could approach $1 billion, though GM officials declined to comment.
GM hopes the cuts will help it save $665 million or more a year and is prepared to use layoffs and plant closings if the buyouts don't generate enough annual savings.
The automaker's cost-cutting efforts are expected to extend to salaried workers in North America, where GM continues to downsize in the face of sluggish sales and market share losses.
"There's some urgency in attacking their cost structure," said David Cole, president of Ann Arbor-based Center for Automotive Research. "They don't need nearly the number of people they've got."
The latest moves in Europe were announced after GM reached agreements with labor organizations in Germany, where most of its European operations are located.
GM is saddled with excess factory capacity, stagnant sales and higher operating costs in Europe, where is has lost $3 billion over the past four years.
Up to 10,000 of the 12,000 job cuts will affect GM's Adam Opel AG division in Germany.
The remaining 2,000 cuts will occur at plants in Zaragoza, Spain, Ellesmere Port, U.K., Trollhaettan, Sweden and Antwerp, Belgium, pending labor agreements.
"The decision to take these inevitable measures was difficult for everyone," Frederick "Fritz" Henderson, GM Europe Chairman, said in a statement.
In Europe, GM and other automakers have faced weak economic conditions and sluggish sales growth for several years. Japanese and Korean automakers are making inroads on the continent, putting more pressure on U.S. and European automakers such as Volkswagen AG.
Unfavorable currency exchange rates, high labor costs and intense competition that is providing little room to increase prices have also undermined GM's financial performance in the region.
"Over the past three years we worked very hard to find other solutions," said Carl-Peter Forster, President, GM Europe. "Contrary to all forecasts, however, the market has not improved."
Earlier this year, GM executives predicted its European operations would stem recent losses and break even in 2004, but the rebound never happened.
While GM's European market share has improved to 9.5 percent this year, up slightly from 9.3 percent in 2003, losses have mounted because the automaker has been forced to offer more generous rebates.
Through the third quarter of this year, GM Europe has lost $758 million, compared with a loss of $399 million in the same nine-month period in 2003.
In Germany, GM's most important market, its market share has dropped to 10.2 percent this year from 10.6 percent.
The latest agreement was reached after weeks of negotiations. In October, GM proposed 12,000 jobs cuts and the announcement triggered a weeklong walkout at plants in Germany.
Instead of involuntary layoffs, GM is offering European employees the buyouts or transfers to other facilities.
With its global automotive profits weakening in recent quarters, GM has moved more aggressively to cut costs.
In recent weeks it has announced plans to close an assembly plant in Baltimore and permanently idle another SUV plant in Linden, N.J., beginning next year.
In Michigan, GM is eliminating a third production shift at its Pontiac truck plant early next year.
In the coming weeks, holiday shutdowns will be extended by a week at plants in Janesville, Wis., Baltimore, Linden and Lansing, and by two weeks at an SUV plant in Arlington, Texas, because of slow sales, according to GM spokesman Dan Flores. GM's U.S. sales are off nearly 1 percent this year and GM is sitting on more than 1.2 million unsold cars and trucks.
GM has pared its salaried work force over the last several years from more than 60,000 in 2000 to about 49,000, including 38,000 in the United States, through attrition and early retirement packages.
Earlier this decade, GM reduced its salaried work force by 10 percent or more each year through attrition and early retirements but reduced the target to 2 to 6 percent in 2004 because of the success of those efforts.
The automaker plans to continue paring white collar workers in 2005 through attrition.
"From time to time we're going to adjust our work force to go with business needs, and 2005 is going to be no different," said GM spokesman Robert Herta.
A slew of incentive programs has not helped GM recover market share in the United States this year and a Red Tag sale that begins today featuring discounts that can total as much as $7,500 are viewed as GM's last chance to match or top its 2003 share.
GM's U.S. market share stands at 27.3 percent this year, down from 27.7 percent last year, according to Autodata Corp.
Even with a big finish in 2004, GM will continue to face growing health care and retiree benefits costs along with blistering competition from domestic and foreign rivals.
The automaker has reduced its full-year earnings guidance downward to $6 to $6.50 a share from $7, and it is backing away from an earnings target of $10 a share by mid-decade.
In the third quarter, GM's automotive operations lost $130 million, after earning $34 million last year.
"We're not satisfied with profitability," GM Chairman and CEO Rick Wagoner said in a recent interview.
"The decision to take these inevitable measures was difficult for everyone."
Automaker, unions agree to eliminate up to 12,000 workers to curb losses and save $665 million a year.
By Ed Garsten / The Detroit News
General Motors Corp. reached an agreement with major unions to cut up to 12,000 jobs at its European operations, including a 15 percent reduction in management posts, to stanch steep financial losses.
Union officials involved in the negotiations said the cost of the early retirement buyouts over the next two years could approach $1 billion, though GM officials declined to comment.
GM hopes the cuts will help it save $665 million or more a year and is prepared to use layoffs and plant closings if the buyouts don't generate enough annual savings.
The automaker's cost-cutting efforts are expected to extend to salaried workers in North America, where GM continues to downsize in the face of sluggish sales and market share losses.
"There's some urgency in attacking their cost structure," said David Cole, president of Ann Arbor-based Center for Automotive Research. "They don't need nearly the number of people they've got."
The latest moves in Europe were announced after GM reached agreements with labor organizations in Germany, where most of its European operations are located.
GM is saddled with excess factory capacity, stagnant sales and higher operating costs in Europe, where is has lost $3 billion over the past four years.
Up to 10,000 of the 12,000 job cuts will affect GM's Adam Opel AG division in Germany.
The remaining 2,000 cuts will occur at plants in Zaragoza, Spain, Ellesmere Port, U.K., Trollhaettan, Sweden and Antwerp, Belgium, pending labor agreements.
"The decision to take these inevitable measures was difficult for everyone," Frederick "Fritz" Henderson, GM Europe Chairman, said in a statement.
In Europe, GM and other automakers have faced weak economic conditions and sluggish sales growth for several years. Japanese and Korean automakers are making inroads on the continent, putting more pressure on U.S. and European automakers such as Volkswagen AG.
Unfavorable currency exchange rates, high labor costs and intense competition that is providing little room to increase prices have also undermined GM's financial performance in the region.
"Over the past three years we worked very hard to find other solutions," said Carl-Peter Forster, President, GM Europe. "Contrary to all forecasts, however, the market has not improved."
Earlier this year, GM executives predicted its European operations would stem recent losses and break even in 2004, but the rebound never happened.
While GM's European market share has improved to 9.5 percent this year, up slightly from 9.3 percent in 2003, losses have mounted because the automaker has been forced to offer more generous rebates.
Through the third quarter of this year, GM Europe has lost $758 million, compared with a loss of $399 million in the same nine-month period in 2003.
In Germany, GM's most important market, its market share has dropped to 10.2 percent this year from 10.6 percent.
The latest agreement was reached after weeks of negotiations. In October, GM proposed 12,000 jobs cuts and the announcement triggered a weeklong walkout at plants in Germany.
Instead of involuntary layoffs, GM is offering European employees the buyouts or transfers to other facilities.
With its global automotive profits weakening in recent quarters, GM has moved more aggressively to cut costs.
In recent weeks it has announced plans to close an assembly plant in Baltimore and permanently idle another SUV plant in Linden, N.J., beginning next year.
In Michigan, GM is eliminating a third production shift at its Pontiac truck plant early next year.
In the coming weeks, holiday shutdowns will be extended by a week at plants in Janesville, Wis., Baltimore, Linden and Lansing, and by two weeks at an SUV plant in Arlington, Texas, because of slow sales, according to GM spokesman Dan Flores. GM's U.S. sales are off nearly 1 percent this year and GM is sitting on more than 1.2 million unsold cars and trucks.
GM has pared its salaried work force over the last several years from more than 60,000 in 2000 to about 49,000, including 38,000 in the United States, through attrition and early retirement packages.
Earlier this decade, GM reduced its salaried work force by 10 percent or more each year through attrition and early retirements but reduced the target to 2 to 6 percent in 2004 because of the success of those efforts.
The automaker plans to continue paring white collar workers in 2005 through attrition.
"From time to time we're going to adjust our work force to go with business needs, and 2005 is going to be no different," said GM spokesman Robert Herta.
A slew of incentive programs has not helped GM recover market share in the United States this year and a Red Tag sale that begins today featuring discounts that can total as much as $7,500 are viewed as GM's last chance to match or top its 2003 share.
GM's U.S. market share stands at 27.3 percent this year, down from 27.7 percent last year, according to Autodata Corp.
Even with a big finish in 2004, GM will continue to face growing health care and retiree benefits costs along with blistering competition from domestic and foreign rivals.
The automaker has reduced its full-year earnings guidance downward to $6 to $6.50 a share from $7, and it is backing away from an earnings target of $10 a share by mid-decade.
In the third quarter, GM's automotive operations lost $130 million, after earning $34 million last year.
"We're not satisfied with profitability," GM Chairman and CEO Rick Wagoner said in a recent interview.
"The decision to take these inevitable measures was difficult for everyone."