GM is going to axe 25k jobs:
General Motors Corp. plans to eliminate 25,000 jobs in the United States by 2008 and to close plants as part of a strategy to revive its struggling North American operations.
Speaking to shareholders at GM’s 96th annual shareholder meeting in Delaware Tuesday morning, Chairman and Chief Executive Rick Wagoner said the capacity and job cuts will generate annual savings of roughly $2.5 billion.
Wagoner revealed the cutbacks as he laid out a four-step strategy to revive GM’s North American business, the biggest and most troubling part of the world’s largest automaker.
Wagoner focused on priorities for clarifying the role of each of GM’s eight brands, intensifying efforts to reduce cost and improve quality and continuing to search for ways to reduce skyrocketing health care costs.
He noted that health-care expenses add $1,500 to the cost of each vehicle. This puts GM at a ”significant disadvantage versus foreign-based competitors,” and said GM has conducted ”intense discussions” with the unions about how to reduce health-care costs, he said.
General Motors shares rose 47 cents, or 1.6 percent, to $30.89 in early trading on the New York Stock Exchange.
Couple of quick notes/questions:
1.) Should we view the loss of jobs as a good thing or bad thing- good, because the company has a plan for long-term existence, bad because of the job loss.
2.) When companies are publicly putting forward the cost of health care per car, it gives you an idea of what their solutiong is- pushing the cost elsewhere. You know where that elsewhere is, don’t you? Single payer health care is a done deal at some point in the next 10-15 years. As soon as Republicans in bed with big business can convince themselves the Clinton taint is gone, they will be bringing it up themselves.
3.) It is easy to understand why some on the left hate businesses and the market, when every time bad news is announced the stock price jacks up.
Discuss.
gratefulcub
It should be a done deal. It should have been a done deal long ago. Not HillaryCare, it didn
bs23
3. I have this thought often enough, but to really hold this sort of thing against “the market”, one ought to sort out what’s happening to the stock price beforehand. If it’s tanking because GM is doing nothing, then it makes sense that it goes up when they do something to cut costs.
The link between corporate layoffs and corporate profits, and in particular CEO compensation, is what really makes you take notice.
Similar arguments can be used, but they don’t seem as plausible somehow.
ppgaz
I’m a lifelong car nut and follower of the industry, which is not for nothing, but …
GM has a lot of problems. Their products are not competitive, for one thing. Their pension and medical costs are an albatross that may yet drag them under the waves. They are still tied to management paradigms from the 1950s and are way too slow to react.
But …. they still sell the most cars of any manufacturer, the last time I saw the charts of worldwide sales. They have huge resources and huge potential. In the short term, the layoffs and closings will help stop bleeding. These will hurt the workers, obviously, but GM is worth saving. Long term, if they can get it together, and get a handle on the legacy costs, and start building really competitive products, they can do well with a smaller market share than they used to have …..they are not going back to the market share they had once, ever. That ship has sailed.
For an idea about their products, check the Road & Track and Automobile magazines now on the newsstands. The comparos that include their Cobalt car and Colorado truck are embarassing. These products are good, but good is just mediocre in this industry. They are up against superior and excellent products, and good just doesn’t cut it.
Molly McRae
Just curious. Don’t the domestic producers of foreign cars have the same or similiar costs? Do they not offer health insurance. As to the cars actually imported, how much does it cost to ship a car across either ocean.
gratefulcub
Molly,
Excellent point. The auto industry may not be the perfect example. I don’t know why Toyota can produce a car here cheaper than GM can. But for most manufacturing industries the point holds, our companies pay and theirs doesn’t.
GM’s problems obviously can’t be boiled down to health care. It seems they thought 4 ton SUVs with 10 mile a gallon efficiency was going to be the wave of the present and future, always and forever. Hybrid? Hippie! Wrong answer.
cc
Honda & Toyota don’t have the RETIREE health obligations that GM and Ford have. That’s where the huge expense is.
Mithrandir
Universal Health Insurance is still not the answer. Yes, we have the greatest healthcare system in the world. Why? Because we pay for it. If we move to a universal system, that money will dry up for the most part, and the industry/market will shrink. The effect will snowball. Yes, eventually it will level out, but particularly putting in the hands of government will create such an over-burdened bureucratic overhead cost as to create disdain for the system all over again.
Foreign manufacturers – particularly the Japanese – actually have health care cost coverage by their domestic government. While that doesn’t directly cover employees in the US, it helps defer some of their bottom-line costs.
Ben Lange
I don’t know where this idea that we lag behind Europe in health care comes from. European health care is execrable.
Remove the profit motive from any endeavor, and the quality of its output will collapse, catastrophically in the case of health care, as doctors will devote their energy not to treating patients but to getting paid for not treating them. Even our current system, as perverse to the laws of economics as it is, already encourages some of this behavior. Why push ourselves over a cliff.
P.J. O’Rourke said it best: “If you think health care is expensive now, wait till you see how much it costs when it’s free.”
Kimmitt
I don’t know where this idea that we lag behind Europe in health care comes from. European health care is execrable.
And ours is, amazingly, even worse. But at least it costs more.
Sojourner
Ben:
The conclusion that US health care is worse than other systems is based on statistics like mortality rates (children, adults). On these measures, the US ranks, I believe, 21st.
gratefulcub
We don’t look at indicators or ‘science’. We just yell We’re Number 1, and dare anyone to say otherwise. We just pretend to be the country we think we are, instead of striving to be as good as we tell ourselves we are. America is a grand experiment, truly a model for all others to follow. But to steal a phrase, “it’s hard work”. We have to keep working towards being the greatest country the world has ever known. We can’t just get there and then turn into cheerleaders for ourselves. Better to look at empiracal evidence and make ourselves better, instead of look at our 21st ranking and yell about liberal american hating statistics. Yes, we are a great nation, but we can always be better, if we realize we’re not perfect.
ppgaz
It’s not just mortality and life expectancy. It’s more complicated than that.
There are “classes” of health care in the US, and that is the real issue, not whether some are doing better than France, and others worse.
In this country, there are those who are so rich that they can get any health care they want any time. A lucky few.
Then there are those who have steady jobs with health insurance benefits. They get mostly okay, but very expensive care, and their access to it depends on holding on to a job, which is something over which the individual and the family have no direct control. “Job security” is pretty much illusory.
Then there are those with steady jobs and no health insurance. This is the slice of the middle class that is basically on their own, faced with inflated costs (no country has higher per-capita expenditures for healh care). These people are sitting ducks, and are screwed, when health care issues strike.
Then there are those on fixed incomes who have a thin blanket of protection like Medicare, which is better than nothing, but not much.
Then there are those without steady jobs who not only have no benefits, they also have little or no resources available for health care. These people are largely screwed whether they get sick or hurt, or not.
What’s wrong in this country is the disparity between classes of access. That disparity helps keeps costs up, pushes costs onto governments, degrades health, and because it is largely hidden from public view, protects the BigPharma and BigHMO interests who are making BigProfits off the layers that have the resources, and want the status quo forever.
There you have it in a nutshell, an ugly, unfair, cruel, overly costly and really inexcusable situation that gets worse by the day.
Put all the lipstick on it you can come up with, them’s the facts.
Molly McRae
A question for Mithrandir and Sojourner
Have either of you actually experienced our wonderful healthcare system for anything beyond first aid?
If so, please tell me where you got it.
Molly McRae
cc
GM only has to provide supplemental health care coverage for retirees. If it is like Lockheed, the coverage mirrors Medicare and pays only what would otherwise be out-of-pocket. For my parents, Medicare paid about 80%, Lockheed, 16% leaving 4% out-of-pocket.
TM Lutas
The US has some subgroups with unbelievably pathological behavior patterns. This knocks our health statistics for a loop. Our high immigration rate from the 3rd world also tends to set us back in the pack because the prior poor healthcare of many immigrants increases costs when they hit the 1st world.
To do proper international comparisons, you have to either simulate what Canada, Germany, et al would be like if they had our demographic mix or you would need to subtract out our excess gang bangers, 3rd world immigrants, and pathologically obese individuals. The latter is far easier and, from what I understand, we do quite well in international rankings when we normalize demographics.
Let’s face it. Socialized medicine will not decrease the number of people who come in from the 3rd world, nor will it get the lard butts out of their couches and make them start exercising.
Samsung
Does recognizing differences in statistical compilation count as yelling about “liberal” or “America-hating” statistics? For instance, some nations with a much greater tendency to euthanise (sp) critically ill babies simply do not count them as part of the “infant mortality” statistics. This tends to “deflate” European mortality rates artificially, and reflects political/ethical differences between the US and other Western states. The point is that statistics can easily be manipulated to support one political position or another, and the current enmity between Europe and America is hardly conducive to “impartial” comparative analysis.
Ben Lange
Sojourner:
I don’t know about the source of the stats, but the infant mortality stats are a virtual hoax. Prematurely-born infants in Europe who die are not considered “live births” and so do not count against their infant mortality stats. Also, the U.S. leads the world in fertility treatments that allow older women to conceive children. Unfortunately, those women are more likely to bear children with birth defects resulting in early death.
Similar gaming with the statistics probably explains the adult stats, as well. The very superiority of our system (in diagnosing and attempting to treat illnesses most countries would ignore or fail to notice) is being very unfairly used against us.
Eric Pobirs
The cancer stats in many Asia countries are completely false and created a hoax around a belief that adopted their diet could avoid such illness. It turned out that it was customary in many of those cultures to not deliver a terminal and instead send the patient home with the belief it was a passing discomfort or just the effects of age.
Eric Pobirs
When gauging Wall Street’s reaction to bad news, you have to consider: bad news for who? Many investors regard such announcements as an indication that a company is finally being honest about its problems and doing what is needed to move forward. If anything, the greater a company’s number of employees the worse it looks on paper. Each employee is an inherent minimum cost. If Company A with 100 employees makes the same gross revenues as Company B with 200 employees, and both companies pay their employees approximately the same, which is showing more profit potential.
Bob
First National Health. Then pay Toyota for a bunch of those hybrid Prius engines, or get on the stick and develop one of their own. While I enjoy those big trucks in commercials driven through mud by macho guys, when they only get 8 mph, well, a lot of people out there are driving with millstones around their necks.
cc
Molly–
No, for “early retirees,” (i.e., pre-65; I believe you could have retired with full benefits as early as 52 or 55), GM was on the hook for health coverage till they turned 65, when company-paid coverage would then be supplemental to Medicare.
Honda & Toyota don’t have those years and years of non-workers (and their families) to provide health coverage for.
cc
Molly–
No, for “early retirees,” (i.e., pre-65; I believe you could have retired with full benefits as early as 52 or 55), GM was on the hook for health coverage till they turned 65, when company-paid coverage would then be supplemental to Medicare.
Honda & Toyota don’t have those years and years of non-workers (and their families) to provide health coverage for.