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GM’s Downsizing Strategy Moving With Great Efficiency

May 4, 2009
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Related Topics: Managing Change, Downsizing, Latest News
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Employing the efficiency of an automotive assembly line, General Motors has laid off close to 3,400 salaried workers in recent months, moving individual employees from their desks and out the door in a half-hour’s time.

The GM layoffs are part of a last-ditch effort to “right-size” its workforce in order to avoid the kind of bankruptcy filed by Chrysler on Thursday, April 30.

Yet it looks like the latest round of layoffs is just that—the latest round, giving employees who remain at GM little relief.

May 1 marked a soft deadline for accomplishing the first round of layoffs. It also marked the beginning of a pay cut—3 to 10 percent, depending on a person’s rank—for many of the remaining 26,250 salaried workers in the U.S.

Now the company is looking to its next major deadline of June 1, when, according to a regulatory filing last week, GM said it would run out of cash unless it receives more financing and debt relief. In the filing, GM said it expected additional manpower reductions among its salaried workforce. The company also said it would trim its hourly workforce by 7,000 more than it had outlined in its first restructuring plan submitted February 17. 

Current and recently laid-off GM workers spoke about the last few weeks at GM on condition of anonymity because they were afraid to lose their jobs or their severance pay. They describe an atmosphere in recent months of uncertainty as executives were tasked to cut 10 percent of their workforce.
 
“We were on pins and needles forever,” said one longtime employee who was spared the cuts.

Cuts were made based on whether a person’s position was deemed redundant, the level of their subject-matter expertise, and performance reviews, current and former employees said.

Those laid off say they knew when it was going to happen because conference rooms—used to deliver the bad news—were booked for an entire day under the guise of GMU, which stands for GM University, the company’s employee training program.

“They tried to disguise it as training, but we knew what it was,” said another laid-off employee.

Employees who were laid off say they met with their supervisor and an HR manager in the conference rooms, where they were told they would have to sign papers as part of a severance agreement. Laid-off salaried employees are receiving one month’s pay for every two years worked up to six months’ severance, said GM spokesman Tom Wilkinson.

Workers also get up to three months of job placement help from such firms as Philadelphia-based Right Management, Wilkinson said.

After another HR manager came to confiscate employee phones, computers and other property, laid-off employees left. GM allowed employees to keep their company cars for one month. The entire process took less than a half-hour.

“The automotive industry is one of the modern marvels,” said one employee who was laid off. “There’s no other industry in the world that can move as much material as efficiently. … There’s no reason why the exit process wouldn’t be as honed.”

—Jeremy Smerd

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