GM Makes Tough Labor and Production Cuts

Apart from the drastic, yet somewhat to be expected measures taken by GM in regard to its brands and future business plans, the American manufacturer has also outlined the measures it will take to step up cost cutting. In plain terms, this means the steps GM will take to cut workforce, production (both the number of vehicles and the number of plants) and expenses.

Production wise, GM will focus on reducing "the total number of assembly, powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by the end of 2010, a reduction of 28 percent, and to 31 by 2012." This means seven plants in addition to the ones targeted by the February 17 plan. This means GM will focus on building multiple bodies and architectures in one plant, instead of using multiple facilities.

Fewer plants will mean less employees. According to the official release by GM, "U.S. hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction, and level off at about 38,000 starting in 2011." That's 7,000 to 8,000 more than in the February 17 plan. GM expects through these types of measures to continue and salaried and executive employment to be further downsized.

By taking these measures, GM hopes to reduce labor costs, from "$7.6 billion in 2008 to $5 billion in 2010, a 34 percent reduction." To do this, "GM will continue to work with its UAW partners to accomplish this through a reduction in total U.S. hourly employment as well as through modifications in the collective bargaining agreement."

"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, GM's CEO. "Our responsibility is clear - to secure GM's future - and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."