GM Ups Layoff Numbers

On June 7th I reported that General Motors was planning to lay off 25,000 workers. Today the number got higher:

General Motors Corp. (NYSE:GM) will eliminate 30,000 manufacturing jobs and close nine North American assembly, stamping and powertrain plants by 2008 as part of an effort to get production in line with demand.

The announcement Monday by Rick Wagoner, chairman and CEO of the world's largest automaker, represents 5,000 more job cuts than the 25,000 that the automaker had previously indicated it planned to cut.

GM said the assembly plants that will close are in Oklahoma City, Lansing, Mich., Spring Hill, Tenn., Doraville, Ga., and Ontario, Canada.

An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.

Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore., and one unidentified site. A shift also will be removed at a plant in Moraine, Ohio.

You have to wonder how much of an impact outrageous union wages and benefits have to do with all of this. I'm guessing quite a lot. When you're paying somebody something like $50 an hour (including benefits) to put bumpers on Chevys, you can't expect that the final product will be something that consumers can afford. In addition, in order to keep the costs from being completely off the charts, the companies are forced to reduce costs elsewhere, and there goes the quality.

I have a company car - a 2002 Toyota Camry - which now has nearly 85,000 miles on it. It still looks brand new, and the only maintenance I've ever had to do to it is follow the recommended service at 5,000 mile increments, put on a new set of tires and buy a new battery. That's it. I've never had an American made car that ran that long without major problems.

I've had two different Chrysler Corp. minivans. The 1987 van needed a new transmission at 80,000 miles, and the 1995 went through two transmissions before 85,000 miles.

Our current second car is a 2001 Ford Explorer with about 84,000 miles on it. It groans and moans like an old lady getting out of a beanbag chair, and I fully expect major problems sooner rather than later. We and the warranty company have already spent a great deal of money keeping this thing running. At this point in time I will not buy an American made car. It's just too risky a proposition.

I'm all for "buying American" and all that, but I'm not an idiot. American manufacturers are going to have to figure out how to build value AND quality into their vehicles before I'll invest in them again.

I feel sorry for the displaced workers. Given the tremendous salary and benefits they've enjoyed with GM, as manufacturing workers their skill sets may not mesh well with today's job market, and they'll have an extremely tough time finding anything they're qualified to do that could begin to replace their old compensation package. In some ways they've been set up for failure by their own union bosses.