General Motors recently announced plans to cut 30 000 manufacturing jobs in North America, closing a dozen assembly and parts factories in an effort to staunch losses that have reached $4-billion so far this year.
GM had warned workers last month that plant closures were imminent but the scale of the cuts was unexpected. The job losses represent more than 9% of the company’s workforce. It is the largest round of cuts since a huge restructuring in 1991 when 74 000 jobs were lost.
Chairperson and chief executive Rick Wagoner said the plans were ”tough medicine for us and it is tough medicine for everyone involved”.
The actions, he said, were ”necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible.”
By the end of 2008, GM will reduce its North America capacity to 4,2-million cars and trucks, a 30% reduction since 2002. The main car workers’ union, the United Automobile Workers, described the announcement as extremely disappointing. ”We have said consistently that General Motors cannot shrink itself to prosperity,” said president Ron Gettelfinger.
Last week, Detroit rival Ford, facing largely the same problems as GM, said it planned to cut 4 000 white collar jobs.
The closures reflect how rapidly GM’s fortunes have been deteriorating. Last week, shares in the car maker slid to their lowest level since 1987 as speculation spread on Wall Street that the company could be poised to file for bankruptcy. They rose briefly on the job cuts news, before falling back again. — Â