GM Hoping to Cut More Jobs, Sources Report : Employment: They say the auto maker wants to slash its work force by up to 50,000 in the next three years. Company calls the figure speculation.
In the midst of difficult labor negotiations, General Motors Corp. is seeking to slash its hourly work force by as many as 50,000 more jobs in the next three years, sources said Friday.
The cuts would be in addition to 54,000 blue-collar jobs the company previously announced it would trim by the mid-1990s. About 39,000 of those jobs have already been eliminated.
The downsizing is part of a process that began in 1991, when the company said it would lay off 74,000 blue- and white-collar workers and close nearly two dozen plants. The effort has intensified in the last year under Chief Executive John F. Smith.
GM spokesman Jack Harned said reports of the new job cuts, first published Friday in the Detroit News, were “speculation.” But he added, “We plan to have our work force at competitive levels with our competition.”
Analysts said GM needs to reduce its work force to 200,000 to 220,000 hourly workers from the current 265,000 if it is to regain profitability. The auto maker has lost $17 billion in North America in the last three years.
Sources close to the labor talks said job cuts are being discussed by GM and the United Auto Workers union.
“These kinds of things are certainly being talked about,” said one source. “But there are no specific numbers.”
David Cole, director of the University of Michigan’s Office for the Study of Automotive Transportation, expressed skepticism that GM will cut 50,000 more jobs. He said a GM official told him the figure is high.
Cole also said a leak of planned cutbacks during contract talks may indicate some “gamesmanship” on the part of negotiators, who might be trying to increase pressure on one side or the other.
Still, it is no secret that GM wants and needs to shrink further, he said. “They are going to eliminate a substantial number of people.”
A UAW spokesman had no comment on the report.
The union last week agreed to a new three-year contract with Ford Motor Co. that provides for higher wages, continued full health care coverage, job security protection and improved pension benefits. The UAW hopes to sign a similar contract with Chrysler Corp. before turning its full attention to GM.
Some analysts say GM cannot swallow a contract patterned after the one signed by the much healthier Ford. They expect the UAW to grant GM some concessions.
One point that could help GM would be a waiver of the requirement that it replace every two retiring workers with one new employee. That would make it easier for GM to shrink more quickly. Typically, about 10,000 GM workers retire yearly. So without the replacement requirement, GM could cut 30,000 jobs just through retirement over the next three years.
More early-retirement offers could also help GM downsize and save money. It is estimated that each retiree costs the company $28,000 a year, while those on layoff cost GM about $46,000 a year.
Another way the company hopes to become more efficient is by selling poorly performing plants. Last week, it agreed to sell five component factories to an investor group headed by former Chrysler manufacturing executive Richard E. Dauch. The plants employ about 6,800 people.
GM expects to lose money in North America in the third quarter because of plant closings for model changeovers. But it still vows to break even, before interest and taxes, for the year.
Shrinking Auto Maker
Employment of hourly workers at General Motors Corp. has shriveled to just slightly more than half the level of 15 years ago. Sources say the car maker may eliminate up to 50,000 more jobs in the next three years.
Year-End U.S. Hourly Workers* 1978 520,000 1979 510,000 1980 514,000 1981 476,000 1982 446,000 1983 426,000 1984 424,000 1985 435,000 1986 421,000 1987 399,000 1988 373,000 1989 345,000 1990 329,000 1991 304,000 1992 288,000 Sept., 1993 265,000
* Includes active workers, those on temporary or indefinite layoff and those in GM’s Jobs Bank program.
Source: General Motors Corp.
