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General Motors' Workforce Faces Big Cuts at an ‘Unadulterated Speed’

June 1, 2009
Related Topics: Downsizing, Benefit Design and Communication, Labor Relations, Latest News
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Minutes after General Motors filed for bankruptcy protection, CEO Fritz Henderson in a 45-minute videoconference attempted to raise the spirits of a beleaguered workforce even as he announced the company would lay off an additional 4,000 salaried employees, most by year’s end.

On Monday, June 1, Henderson spoke of the “new GM” that would emerge from bankruptcy with more competitive labor contracts, reduced operating costs, fewer plants and a leaner production capacity focused on small, fuel-efficient cars.

Henderson later spoke during a news conference, evoking a sober optimism and saying that the bankruptcy was a “defining moment” for the 101-year-old automaker.

“The new GM will have a significantly healthier balance sheet,” he said.

He spoke of the salaried and hourly workforce reductions and plant closures as “extraordinarily difficult steps.”

Henderson said he expected the bankruptcy to be completed within 90 days.

By 2010, GM said it expects to have a salaried workforce of 23,000 in the U.S., down from the 29,000 salaried workers GM had at the end of 2008.

Hourly U.S. workers will drop to 40,000 in 2010 and 38,000 by 2011. GM says it will close 14 plants by 2010. GM had 61,000 hourly workers at the end of 2008.

In a note to employees, the company said, “General Motors is working with the U.S. Treasury to reduce some retiree benefit obligations by roughly two-thirds. This reduction will impact salaried retiree life insurance, salaried retiree health care, executive non-qualified pension, executive retiree life insurance and non-UAW hourly life insurance and we are still working on how to accomplish this in the most appropriate way.”

The company said it will reduce the number of dealers to 3,600 by 2010 from the 5,969 it counted at the end of 2008.

“We need to move fast. Speed is of the essence,” Henderson said during the news conference. “Not with a sense of urgency. I’m talking about pure, unadulterated speed.”

As GM attempts to rebuild, its workers describe an atmosphere resembling the TV show Survivor.

“It’s dog eat dog,” said one GM worker on Monday who asked for anonymity because workers are not allowed to speak to the media. “You have to watch your back. People who were friends are no longer.”

Employees describe an atmosphere of low morale and anxiety that has been heightened by a deterioration in work conditions. Salaried workers describe lawns that have not been mowed in weeks and bathrooms not adequately stocked with toilet paper or soap.

A spokesman said the deterioration is to be expected at a time of extreme austerity for the company.

For employees who once referred to their employer affectionately as “Generous Motors,” the swift change has been upsetting. A kind of shock, mixed with gallows humor, has set in, workers say.

Employees say GM stands for “Government Motors” now that the Treasury Department is the major stakeholder, followed by the unions and union’s retiree health care trust.

The bankruptcy filing of General Motors represents a new chapter for the storied American carmaker, and Henderson, in his talk with employees, tried to convey a sense of renewal by focusing on the distinction between the “old GM” and the “new GM” that would emerge from bankruptcy to reclaim its position of prominence in the global auto industry as a leader in 21st century green technology.

Workers, however, have already begun to refer to his talk as “the eulogy.”

—Jeremy Smerd

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