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Mixed Layoff News; GM Lands a Broadside

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Seasonally adjusted, 106,238 employees received proveribal pink slips last month, the fewest number of monthly layoffs since October 2000, according to the Bureau of Labor Statistics (pdf). However, two days earlier, General Motors landed a broadside on its union, reporting that it would layoff about a quarter of its North American factory workforce. This is the largest layoff pronouncement since the January 2003 announcement that Kmart would cut 37,000 jobs. It follows an earlier layoff announcement from Ford and the continuing drama of bankrupt parts supplier Delphi.

GM also said it would close about a dozen plants. One of those factories, in Flint, MI, employs 735. In the 1980s, GM employed about 80,000 in Flint; after this latest round of cuts, the company will employ about 20,000. The United Auto Workers was born in Flint in 1937, an outshoot of a strike.

Flint was featured in Michael Moore’s 1990 movie Roger and Me, which chronicled the tale of the modern factory town. Census data show that one-quarter of the town’s 125,000 population lives below the poverty line. In an e-mail, Moore wrote:

“General Motors continues its destruction of cities like Flint and the American middle-class — all because GM’s executives never bothered to take a Honda or Toyota for a test drive and figure out what makes a good car sell.”

Prior to the GM announcement, Ford (the number two auto-maker) announced it would cut 10 percent (4,000 jobs) of its white collar work force. Additional cuts are expected after the new year. The company has already eliminated about 3,000 salaried jobs in North America this year.

Health care and pension costs — which are greater for American firms than foreign ones due to private versus public social support systems — have been given by industry as a reason for the belt-tightening. In addition, sales of large SUVs have dropped due to increased gasoline prices; the SUVs have traditionally been principle profit centers for Detroit.

In the first of many ripple effects, Continental Tire North America is cutting about 300 jobs from its workforce.

In related news, the UAW is protesting bankrupt Delphi’s proposal to provide bonuses to executives: “Delphi’s Chairman Steve Miller recently proposed $90 million in cash bonuses, while seeking a 60 percent pay cut for workers.” The bonuses would go to about 600 executives under the proposal; concurrently, about 24,000 UAW members get steep cuts in wages and benefits.

Demonstrating just how disconnected executive compensation is from company performance, from 2000-2004, Delphi Chairman J.T. Battenberg III received $21.9 million in salary and stock while the company lost more than $4 billion.

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Employment, Ford, General Motors, Layoffs,

This article first appeared at uspolitics.about.com

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About Kathy

  • Maurice

    “General Motors continues its destruction of cities like Flint and the American middle-class — ”

    The unions get to share in the blame for the downfall of manufacturing.

  • steve

    maybe they shouldn’t have made garbage cars in the 70s-90’s…then maybe people would still buy their vehicles. then 30,000 people would not have been pink-slipped.

  • Nancy

    In light of these kinds of cuts, and recent dismal performance which produced these cuts, GM executives shouldn’t be getting ANY kind of bonuses whatsoever. On the contrary, they should be taking massive salary/perk cuts themselves for their sorry-ass work, instead of crowding at the trough like the hogs they are. The major reason GM is in trouble is because these same executive maggots have spent the last 10 years or so trying to tell the customers what they (the customers) wanted, and not listening to the customers, or worse, ignoring the writing on the energy-supply wall & producing huge, oversized gas guzzlers for all the puerile-minded, energy-hog half-wits out there who think bigger is better & 80 mph is just too cool. I’m sorry for the workers; I’m very surprised none of them has gone postal & tried to shoot up the damned executive pigs yet. I certainly wouldn’t convict anyone who managed to hit a couple.

  • Bliffle

    Doesn’t surprise me. My observations from working with top management in major US corps the past 30 years is that the quality has gone way down. Also the goals: a definite shift from corporate to personal goals on the part of execs. They spend at least 50% of their time re-negotiating their bonus contracts with the board instead of seeing to the corps business. These guys take NO risks: if revenue goes up they get a bonus, if profits go up they get a bonus, if costs go down they get a bonus. Always a bonus, never a penalty. And they always can arrange to hit on one or more of their numbers. Basically, executives are fleecing the corps they are hired to operate.

  • Nancy

    The question arises, why do the stockholders tolerate it? Is it because the majority of them are small shareholders in mutual funds, while voting shares are concentrated in the hands of those very persons fleecing the corporations? If so, how can this plug be pulled? Surely there are laws to protect the interests of the common stock shareholders?

  • http://biggesttent.blogspot.com/ Silas Kain

    Ah, Nancy, such an idealist. Wanna pull the plug? It’s time to firebomb K Street.

  • Nancy

    Yes. If I thought I could get away with it, or actually make a difference so that merely a different set of 2-legged roaches took up residence/practice, damned right I would.

  • Maurice

    It is all well and fine to blame the CEOs but the unions share a large portion of the blame.

    We would have American made TVs today if not for the unions.

  • http://biggesttent.blogspot.com/ Silas Kain

    Well, don’t the unions also have representation on K Street? Lord knows enough of the union heirarchy is in the control of organized crime. That’s the ticket. We should just turn the entire Federal government over to a crime family. The operation will never run in the red, countries will be terrified of us, and there’ll always be somebody there to pay the medical bills.

    Tony Soprano 2008

  • steve

    Maurice, many televisions are still made in the US. I sell appliances, bedding, and televisions.

    I own a Toshiba, yes TOSHIBA {Tokyo Shibura} Cinema Series projection television…manufactured outside of Nashville, TN. It is a wonderful set and I would recommend it to anyone.

  • http://U.A.W. StrawBoss

    This Delphi bankrupcey was a 6 yr. pre- meditated deal by G.M. and Delphi to bust the Union down.G.M. stole are A.C. Delco logo and kept all revenues from it! They also dictated are prices from SPO and did not allow us to sell direct to local retailers or auto part stores. How in the HELL can a buissness make any money with these restrictions! Yea it was pretty cool making all that overtime money the last 6yrs. but in the back of our minds we all new it was a reciept for disaster! I feel the bankruptcey judge and the public need to know this and that our Delphi site was in the black 3yrs. prior to the spin-off. All Delphi workers nationwide deserve and earn thier hourly wage but the open checkbook was a sign the last 6yrs. that even Delphi new there was no hope to make money under the G.M. stranglehold put on us!

  • http://uspolitics.about.com/ Kathy

    Hello, StrawBoss:

    I’m not sure how GM could “steal” something that they already owned. Can you please explain what you mean about the AC Delco logo?

    Also – a gentle suggestion that spellcheck is a lovely tool …

    Kathy