Arbor Update

Ann Arbor Area Community News

GM to cut 30,000 American jobs by 2008

21. November 2005 • Murph
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Happy Thanksgiving, Michigan! GM has just announced plans to close nine plants in the next two years, including,

  • Lansing, Mich., Craft Centre will cease production in mid-2006.
  • Lansing, Mich., Metal Center will cease production in 2006.
  • Parts Processing Center in Ypsilanti, Mich., will cease operations in 2007.
  • Flint, Mich., North 3800 engine facility (“Factory 36”) will cease production in 2008.

“The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work,” Wagoner said. “But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible.”

And the very best way to make North American operations profitable is to have none!



  1. “And the very best way to make North American operations profitable is to have none!”

    Sometimes, yes. Isn’t it a basic fact of Economics 101 that a firm will choose to exit a market when it can maximize profits (or minimize losses) by producing zero units? GM is apparently in that unfortunate position.
       —Jeff Dean    Nov. 21 '05 - 01:33PM    #
  2. Isn’t free trade awesome? (Sarcasm)
       —Jared Goldberg    Nov. 21 '05 - 01:44PM    #
  3. yes, mr. dean, the big wig runners of gm will profit from this strategy…the working people of michigan will lose dearly, however…

    our victory is imminent,
    ari p.
       —Ari P.    Nov. 21 '05 - 02:33PM    #
  4. uaw statement:

    http://www.uaw.org/news/newsarticle.cfm?ArtId=368
       —Ari P.    Nov. 21 '05 - 02:36PM    #
  5. Isn’t free trade awesome? (Sarcasm)

    GM is also losing marketshare to domestically manufactured Hondas, Toyotas, Nissans, etc. The highest volume cars from Japanese companies (Accord, Camry) are built in the U.S. and have been for many years. They’re not built by UAW labor in Michigan, though—is free trade with Tennessee and Kentucky a bad idea, too?

    The UAW says, “We have said consistently that General Motors cannot shrink itself to prosperity. In fact, shrinking General Motors only exacerbates its problems.”

    Right. All this negativity is self-defeating! Instead of closing plants, GM should be opening them! Instead of making fewer cars, they should be making more cars! And then when they find that people don’t want to buy those either, they should…um…I know, they should open even more plants and make even more cars!

    (On the bright side, those Toyota Avalons and Siennas manufactured in Kentucky and Indiana are designed in Ann Arbor).
       —mw    Nov. 21 '05 - 03:47PM    #
  6. From CNN: “With the announced closings, GM is essentially keeping its capacity of large sport utility vehicles and pickups intact, even though big SUVs sales have slumped in recent months in the face of higher gasoline prices.

    Wagoner said he believed that a new line of large SUVs due early in 2006 should give a lift to those sagging sales, and that some of its large SUV capacity is being changed to produce either SUVs or pickups, depending upon demand. He said GM needs to keep capacity for the vehicles that it can sell at the greatest profit—namely the larger vehicles.”

    Hmmm.
       —Juliew    Nov. 21 '05 - 04:32PM    #
  7. I heard rumors that all the plants were moving by 2008… didn’t believe it. Shock. Good greif.
       —Matt    Nov. 21 '05 - 04:47PM    #
  8. This has been an unfortunate situation not for GM, but for the workers. Imagine the number of employees who will be affected by this closure. However, this is what business is all about. Nothing is certain and assured. I still think that GM is capable of recovering. With a thick market, chances are going to be slim.
       —Online Wong PoKér Hu    Nov. 21 '05 - 07:33PM    #
  9. if american business’ strategy is to cut and run whenever we loss market share to business from other nations, then i have to say, this country’s economy is headed straight for black hole…

    start learning chinese,
    ari p.
       —Ari P.    Nov. 21 '05 - 08:12PM    #
  10. if american business strategy is to cut and run whenever we loss market share to business from other nations, then i have to say, this country’s economy is headed straight for black hole…

    GM has been holding onto excess capacity with the hope of recovering market share for years, and it hasn’t worked. Instead of recovering market share, they’ve continued to lose it.

    start learning chinese

    Chinese? GM is not losing market share to the Chinese. Do you think the engineers at the Toyota tech center speak Japanese? How about the (non-union) auto workers in Kentucky?

    Michigan looks like a pretty good bet to retain the management and R&D work (the transplants are expanding here), but manufacturing is much more doubtful.
       —mw    Nov. 21 '05 - 08:38PM    #
  11. I think GM’s problem has been failure to adapt while they’ve been waiting around to regain market share. They’re the classic globalization-era company – “We’re not uncompetitive because we have bad product; we’re uncompetitive because our labor costs are too high.”

    Of course, I suppose this just might be a better business strategy than their past year’s worth of “You’re losing money on every sale!” “Yes, but we make up for it in volume!” marketing techniques…
       —Murph.    Nov. 22 '05 - 12:02AM    #
  12. Milo Minderbinder comes to mind.
       —Dale    Nov. 22 '05 - 12:12AM    #
  13. Of course, I suppose this just might be a better business strategy than their past year’s worth of “You’re losing money on every sale!” “Yes, but we make up for it in volume!” marketing techniques…

    Well, it’s hard to appreciate how deeply and truly screwed GM is. They’ve lost $4 billion already this year, but they’re announcing plant closings for … 2008?

    2008?!? Why not 2005? Or 2006? Or 2007? Because they really can’t save any money before 2008. If they close plants before the end of the contract, they still have to pay the workers while they’re in the ‘job bank’. On the other hand, if they induce workers to take early retirement, they get stuck with the cost of the buyout package AND they get to keep paying them anyway (in the form of pensions).

    And then they’ve got Delphi hanging over their heads. They’re certainly going to get hit with a huge bill there (maybe more than $10 billion). And if the UAW strikes Delphi, then GM is probably going to join them in Chap 11. But to prevent a strike, GM may have to agree to some kind of additional Delphi bailout, which will make the bottom line worse.

    In terms of product, GM has invested heavily in new SUVs and pickups. Seems stupid in light of what gas prices have been doing, but those product development decisions were made some years ago. Changing the direction in terms of products takes years and more billions. And GM has recently come out with new car lines—would the Cobalt, Malibu, or Impala be at the top of YOUR shopping list if you were looking for a new car?
       —mw    Nov. 22 '05 - 08:04AM    #
  14. I drove through Flint a lot last week. My sister had a baby at Hurley Medical Center. Flint is almost a ghost town of boarded-up, bombed-out houses in the city center area. It’s eerily quiet and there isn’t a lot of traffic – depressed people, the ones who can afford cars, drive slowly. I’m fairly sure that the GM execs who are making the decisions to close plants don’t live and work in Flint. They have no idea.
    Flint retains its place in the top-ten most violent places to live. Close another plant, yes. Give folks more time to do violence. Give them more reason to have nothing left to lose. GM should be ashamed of itself.
       —Ex-Flint girl    Nov. 22 '05 - 11:24AM    #
  15. Brandon and I have been spending a lot of time in Flint this semester for our masters’ project, and I personally haven’t found it nearly as bad as is hyped. Sure, as ex-Flint girl says, there are a lot of unmaintained houses in the near-downtown neighborhoods, but there’s also a lot of activity in and around downtown. A lot of money is being invested in downtown right now for loft conversions, facade renovations, and even new construction, and the neighborhoods are in various stages of getting organized and taking an active hand in things.

    Of course, the fact that you can buy a house near downtown Flint for less than the cost of a down-payment on a house near downtown Ann Arbor shows that the city is hardly experiencing stunning success, but it’s definitely not in free-fall – while there’s plenty of visible evidence that the city has declined, I’d definitely say it’s stabilizing and looking towards a recovery.
       —Murph.    Nov. 22 '05 - 01:28PM    #