The beginning of the end?

[Terry M.]

FOR RELEASE: 2008-12-12

CONTACTS

GM Announces Significant Production Cuts for Q1 '09

Moves In Direct Response to Rapidly Deteriorating Market Conditions


DETROIT - General Motors announced today a significant reduction of planned production for the first quarter of 2009 due to the ongoing and severe drop in industry sales, which were down 36 percent in November overall and 41 percent for GM (2007 vs. 2008). The impact of these and recently announced actions to adjust production with market demand, will result in the temporary idling of approximately 30 percent of GM's North American assembly plant volume during the first quarter of 2009 and will remove approximately 250,000 units from production.

The speed and severity of the U.S. auto market's decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing.

The following U.S., Canada and Mexico operations impacted by today's announcement include:

U.S.:

Ft. Wayne (Ind.) - Chevy Silverado, GMC Sierra Light Duty Regular and Extended Cab
Flint Assembly (Mich.) - Chevy Silverado, GMC Sierra Heavy Duty Regular and Crew Cab & Medium Duty
Wentzville (Mo.) - Chevy Express, GMC Savanna
Lansing Delta Township (Mich.) - Buick Enclave, GMC Acadia, Saturn Outlook
Pontiac Assembly (Mich.) - Chevy Silverado, GMC Sierra Heavy Duty Extended Cab
Spring Hill (Tenn.) - Chevy Traverse
Fairfax Assembly (Kan.) - Chevrolet Malibu/Hybrid, Saturn Aura/Hybrid
Arlington Assembly (Texas) - Full Size SUVs: Chevy Suburban, Tahoe & Tahoe Hybrid, GMC Yukon, Yukon XL & Yukon Hybrid, Cadillac Escalade/Escalade ESV & Escalade Hybrid
Lansing Grand River (Mich.) - Cadillac STS & CTS
Orion (Mich.) - Chevy Malibu, Pontiac G6
Detroit-Hamtramck (Mich.) - Buick Lucerne, Cadillac DTS
Shreveport (La.) - Chevy Colorado, GMC Canyon, Hummer H3 & H3T
Bowling Green (Ky.) - Chevy Corvette, Cadillac XLR
Wilmington (Del.) - Pontiac Solstice, Saturn Sky, Opel GT
Canada:

Oshawa Consolidated - Chevy Impala
Oshawa Truck - Chevy Silverado, GMC Sierra Light Duty Extended and Crew Cab
CAMI - Chevy Equinox, Pontiac Torrent
Mexico:

Silao - Chevy Silverado, GMC Sierra Light Duty Crew Cab, Chevy Avalanche, Cadillac Escalade EXT
Ramos 2 - Chevy HHR, Saturn VUE, Chevy Captiva
San Luis Potosi - Chevy Aveo, Pontiac G3
As a result of these assembly plant actions, GM will also continue to assess its powertrain and stamping capacity needs and make adjustments as appropriate.

General Motors Corp. (NYSE: GM), the world's largest automaker, has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 252,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 34 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

[Wayne W.]

Re: The beginning of the end?

Could be the beginning of the beginning. They can weed out the bad wood and come back strong with fewer lines and quality products. Says here that they are down approximately 40% from last year. Well 60% of 9.37 million units is not chump change. If you were to start a new company and you produced and sold 5 million cars the first year, I think you would jump at the opportunity. In the depth of the last big depression Cadillac only produced 3000+ cars for the entire year. I think the figure was 600K+ for Chevrolet, which was probably down 50% or more from earlier production years, but it held GM together. Many companies didnt make it through.

My dog has heart worms. They are parasites you know. A parasite will kill his host and himself in the process. The unions are parasites too, just yesterday they proved it by refuseing to make concessions to keep their host alive. They dont want to bear the burden, but are happy for me as a tax payer to do so. I would think, that, is where the restructuring should start.

[Lyndon S.]

Re: The beginning of the end?

It is not looking good for our beloved car company. If it survives it will be a entirely new beast. And no way like its glory days in the sixties when it had so much market share I have really been sad the last few nights and have done a lot of thinking on what is going to happen to our car and its parent company. But we could be witnessing the end, I hope I am so wrong an that we can pull through this as I write. A little pray never hurt, and in this case I am sure a whole lot would help in this struggle .
________
Kelly

[Bill C.]

Re: The beginning of the end?

Ditch the @#$% Unions !!!

They are ONE of the bigger reasons the U.S. car industry is in the pickle they are.

Do they really serve any purpose any longer?

50-60 years ago, HELL yeah!


I REALLY feel for the hard working people that work for GM (and other auto makers).
Maybe they should pitch a fit with the union - threaten to kick them out of the big picture.

I would somehow bet that these folks would make out better, and the auto makers could reduce one very LARGE expense they have.

My 2 cents here - not an expert in any way, just seems to make good sense.

[Duke W.]

Re: The beginning of the end?

It's all about labor cost and work rules that thwart productivity...

For 30 years after the introduction of diesel-electric locomotives, the "brotherhoods" strong-armed the railroads into retaining firemen on diesels. Brakemen were required for over a hundred years after the introduction of the Westinghouse automatic brake, and a full workday was about 100 miles - what a nineteenth century steam locomotive could do in 8 hours.

The railroads damn near died in the seventies, but with consolidations and more reasonable work rules they survived and were doing so well a year ago that they were going to ask Uncle for funding to build more track to eliminate bottlenecks. (The current reduction in traffic has probably put that off a few years.)

It's all in the hands of the UAW. They can drop their pay and benefits from 70 bucks an hour to 45, which is what the foreign transplants pay or watch Detroit die and try to get a job at Home Depot or Walmart and not even make 20 bucks and hour in wages and benefits.

Once the above is done, there is no more need for the UAW, but do you think the UAW powers would ever give up their golden fleece and the 2-300 bucks a month each member pays. I doubt it!

So GM and Chrysler go Chapter 11 (and Ford follows suit once they see how well it works), abrogate the UAW contract, fire all the UAW guys then offer them jobs for 45 bucks an hour in pay and benefits without all the productivity killing union work rules - just like the airline industry has done in the last decade.

(Iacocca basically did the same thing with Chrysler back in the eighties, which bought it a couple of decades.)

GM consolidates their product line, recovers, and makes money. There will be a lot of pain along the path, but nobody is guaranteed a pain free life unless they get elected to Congress!

It's all basic Econ 101 once everybody takes off the rose colored glasses.

Duke

[Chuck S.]

Re: The beginning of the end?

Could be the beginning of the beginning. They can weed out the bad wood and come back strong with fewer lines and quality products. Says here that they are down approximately 40% from last year. Well 60% of 9.37 million units is not chump change. If you were to start a new company and you produced and sold 5 million cars the first year, I think you would jump at the opportunity. In the depth of the last big depression Cadillac only produced 3000+ cars for the entire year. I think the figure was 600K+ for Chevrolet, which was probably down 50% or more from earlier production years, but it held GM together. Many companies didnt make it through.

My dog has heart worms. They are parasites you know. A parasite will kill his host and himself in the process. The unions are parasites too, just yesterday they proved it by refuseing to make concessions to keep their host alive. They dont want to bear the burden, but are happy for me as a tax payer to do so. I would think, that, is where the restructuring should start.

You got it, Wayne. It's interesting that the UAW has been unsuccessful at unionizing most of the foreign manufacturers' plants in the South, and the union bosses ain't happy about that. Americans are working there, apparently quite happy to building great products at wages that are kickin' the everlivin' hell out of Detroit.

The irony is...Gettilfinger told them weeks ago at the start of this fiasco that the union auto workers had made all the concessions they were going to make. He made good on his promise...unless, of course, one or more of the US car companies fail; then, I guess they can try to get a job with Brown (UPS), another stellar business model ruined by unionization.

Congress has learned how hard it is to negotiate with the UAW, and no doubt, now have a better understanding of why GM et al are in this predicament. Dubya is going to throw $14 billion of tax payer money at them to keep the corpse breathing until next year. Then, Obama and the Demo Congress can deal with the problem when they come back for the next installment of tax payer dollars.

GM acts like bankruptcy is not an option...well, it is an option. Airlines have gone into bankruptcy and continued to operate continuously until they were able to manage their way out of it. The UAW is deathly afraid of bankruptcy. If GM went into bankruptcy, the union and all the other creditors will have no choice...Federal judges would mandate wage and benefit cuts, and debts to be forgiven by all parties.

Another irony...Ford, that red-headed step child of an auto company, no longer expects to need this government bailout. They plan to operate the good old capitalist way through next year. The inconvenient truth...GM designs better cars, but Ford is better managed. It may be time for the General to make a raid on Ford's upper management...like in the old days.

[Michael G.]

Re: The beginning of the end?

Saw this at the Huffington Post:

<<...the average GM worker earns $72 an hour in wages and benefits while a worker in a non-union Toyota plant gets $42 an hour. Except that that's not really true. What is true is that the cost to GM of an hour of work averages $72 per hour. But that's not because GM is paying such high wages. In 2006, for example, GM's research division reported that the top pay for a GM hourly employee was $27 an hour; another $13 per hour comes from night-shift premiums, overtime, holiday and vacation pay. The rest is health-care, pension and other benefits. Now, an hourly wage of $25 per hour at 40 hours of work per week comes to $1,000 per week. So if a person works 48 weeks out of the year with no paid vacation, that's a salary of $48,000.


Line workers in Toyota and Honda plants do not earn less. In 2007, the Center for Automotive Research in Ann Arbor, Mich. found that for the first time a non-union plant, Toyota's largest U.S. plant in Georgetown, Ky., paid better than plants with UAW contracts, averaging $30 per hour with bonuses, and estimates that wages at Toyota's other plants as well as at Honda and Nissan plants in the U.S. were comparable. The source of the difference in labor costs comes in the costs of benefits, especially "legacy costs." It is critical to recognize that the $72/hour figure does not just include benefits to the workers being paid, it includes benefits to retirees. GM, the largest private purchaser of healthcare in the U.S., spent $4.75 billion in 2007 on retirees' medical coverage. Those legacy costs -- including benefits for a lot of workers who went to work as teenagers and took 30-year retirement while they were still young -- is a primary reason that GM is $48 billion in debt. So the "cost" of an hour of labor for GM may be $72, but that does not mean that $72 is going to the worker performing the hour of work.

Those health care and legacy costs are a tremendous burden on American industry. It is estimated that health care and retiree costs add $2,000 to the price of each American vehicle. Toyota, Honda, and Mercedes don't face those kinds of costs. Their American plants are too new to have large numbers of retirees. As for their plants back home... welcome to the competitive benefits of government pensions and single-payer health care. In this country we chose to rely on a market model in which labor and management would negotiate for the most advantageous deal they could obtain from one another. That adversarial system of negotiated social policy has broken down in the face of competition from nations whose social policies are driven by, well, policy-makers. Interestingly, Walter Reuther warned the Big Three about this danger back in the 1940s and urged them to join the unions in supporting national health insurance.


Rep. John Dingell of Michigan began introducing bills for single-payer health insurance in 1933. His son, John Dingell, Jr., introduced a version of the same bill ever year since he took over his father's seat in 1955. But the owners preferred to keep the system private and purchase industrial peace with ever-bigger promises rather than surrender their role as national policymakers. Toyota USA has fewer than 300 retirees; it will not see its first 30-year veteran workers start to retire until 2018. 25 years ago GM had 425,000 employees. Today it has fewer than 80,000 employees... and 500,000 retirees.>>

Mike

[Steven S.]

Re: The beginning of the end?

Yea, god forbid there are any good paying jobs for the working class in this country.

[Timothy B.]

Re: The beginning of the end?

May be we can all get goverment jobs. I doubt they are feeling any pinch from this, $.50 prescriptions, wonderful health care and you get to walk around like your doing someone a favor and produce if your in a good mood!!

Why our mayor in Baltimore just gave her 2 1/2% pay RAISE to charity, but stated on the news that she is worth every penny of a raise. I guess 150000/yr + benifits is not enough in this economy. Murder and crime OUT OF SIGHT. Police and fire, getting laid off, not the Baltimore of the past that's for sure.

I was starting to think gov money was good for GM but now I feel chapter 11 is the best and go at it without goverment telling them how to run there business.. Can you imagine the federal goverment trying to run auto business!!! Wait till they get done with health care.. Of course I don't think any in congress are going to be on that same health plan..

[Vinnie P.]

Re: The beginning of the end?

My wife and I had the good fortune of being at the assembly plant on Thursday and Friday, Dec. 11th and 12th to participate in the buyers/photo tour as our 2009 was assembled. During the day on Thursday the schedule was for the plant to be closed down from the completion of assembly on Dec. 24th thru the third week of January 2009. On Friday morning it had been announced that due to the field stock of 9806 Corvettes in dealer inventory, the plant would be in a cold shutdown thru the third week of February 2009. The entire line would be shut down and stripped with no units on the line.


Even with the bleak outlook, during our day and a half at the plant, each and every one of the workers was supportive and had a positive outlook. At each station they took the time to talk and say how much they appreciated the support of the Corvette community. They thanked us for our continued support of Corvette and GM in general. Many of them knew they were either being laid off or if on furlough till the third week in February upon their return would be doing different jobs in the assembly process. Yet they took pride in what they did and looked forward to returning in February.

[Donald T.]

Re: The beginning of the end?

Ever wonder what a UAW contract looks like? Well, here it is - all 22 pounds of it. Needless to say, it contains massive amounts rules and regulations, but there isn't a lot in here about competitiveness and efficiency. You can't just blame unions though; management is just as culpable for creating this albatross. You have a lot of good people mired in a very bad system. Long term viability will require a tectonic shift in structure and culture.

Ah, but don’t worry. Now we’ll have a government appointed “Car Czar” that will fix everything. With government bureaucrats in charge, I’m sure they will become a model of efficiency and productivity. What could possible go wrong?

[Andre R.]

Re: The beginning of the end?

Just want to correct some factual errors:
Chuck, you cite the airlines use of chapter 11 as a model for GM. The airlines are a service provider and manufacture nothing. Chapter 11 for GM would be a sure first step toward an eventual chapter 7 as all business models show a significant percentage of consumers would no longer purchase a car from a bankrupt manufacturer.
Fact: consumers use different criteria when purchasing services vs. durable goods.
Duke, Your statement that chapter 11 would give GM the opportunity to fire the UAW might be construed as wishfull thinking on your part, but your use of the airlines as an historical example is factually incorrect. The fact is within the past decade all of the chapter 11 airlines still have all of their unions on the property. The union members have seen their court ordered cuts go to management in the form of huge bonuses. In light of this, most aviation industry experts predict the pendulum is poised to swing the other way now. The pilots of Jetblue have just filed to form a union.
Andre

[Paul J.]

Re: The beginning of the end?

It's all about labor cost and work rules that thwart productivity...

For 30 years after the introduction of diesel-electric locomotives, the "brotherhoods" strong-armed the railroads into retaining firemen on diesels. Brakemen were required for over a hundred years after the introduction of the Westinghouse automatic brake, and a full workday was about 100 miles - what a nineteenth century steam locomotive could do in 8 hours.

The railroads damn near died in the seventies, but with consolidations and more reasonable work rules they survived and were doing so well a year ago that they were going to ask Uncle for funding to build more track to eliminate bottlenecks. (The current reduction in traffic has probably put that off a few years.)

It's all in the hands of the UAW. They can drop their pay and benefits from 70 bucks an hour to 45, which is what the foreign transplants pay or watch Detroit die and try to get a job at Home Depot or Walmart and not even make 20 bucks and hour in wages and benefits.

Once the above is done, there is no more need for the UAW, but do you think the UAW powers would ever give up their golden fleece and the 2-300 bucks a month each member pays. I doubt it!

So GM and Chrysler go Chapter 11 (and Ford follows suit once they see how well it works), abrogate the UAW contract, fire all the UAW guys then offer them jobs for 45 bucks an hour in pay and benefits without all the productivity killing union work rules - just like the airline industry has done in the last decade.

(Iacocca basically did the same thing with Chrysler back in the eighties, which bought it a couple of decades.)

GM consolidates their product line, recovers, and makes money. There will be a lot of pain along the path, but nobody is guaranteed a pain free life unless they get elected to Congress!

It's all basic Econ 101 once everybody takes off the rose colored glasses.

Duke

...Amen!...

[Richard S.]

Re: The beginning of the end?

" You have a lot of good people mired in a very bad system. Long term viability will require a tectonic shift in structure and culture. "




Very well said and right on the money. The problem is, with all the politics and special interests, this very simple truth is lost to everyone.

[Donald L.]

Re: The beginning of the end?

Creative Companies that are run by financial types are the worst run companies. Most of the CEOs at GM have been chosen since the 60s have been bean counters Creative companies with creative managers have prospered. Case in point is Apple Computer. During the 80s the Board at Apple decided to replace Steve Jobs with John Scully, a finance guy. Six years later Jobs was back and Apple started to turn out products that people wanted. GM needs a Steve Jobs to turn it around