GM reportedly to cut 50,000 more jobs Total by 1996 put at 100,000-plus

September 25, 1993|By Los Angeles Times

DETROIT -- At least a week before the bargaining begins in earnest, General Motors Corp. is seeking to slash its hourly work force by as many as 50,000 more jobs in the next three years, sources said yesterday.

The cuts would be in addition to 54,000 blue-collar jobs the company previously announced it would trim by the mid-1990s. About 39,000 of those jobs already have been eliminated.

The reduction is part of a process that began in 1991, when the company said it would lay off 74,000 blue- and white-collar workers and close nearly two dozen plants. The effort has intensified in the past year under Chief Executive John F. Smith.

GM spokesman Jack Harned said reports of the new job cuts, first published yesterday in the Detroit News, were "speculation." But he added: "We plan to have our work force at competitive levels with our competition."

Analysts said GM needs to reduce its work force to 200,000 to 220,000 hourly workers from the current 265,000 if it is to regain profitability. The automaker has lost $17 billion in North America in the past three years.

Sources close to the labor talks said job cuts were being discussed by GM and the United Auto Workers. But a specific target for reductions was not yet on the table. "These kinds of things are certainly being talked about," said one source. "But there are no specific numbers."

David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation, expressed skepticism that GM would cut 50,000 more jobs. He said a GM official told him the figure was high.

Mr. Cole also said a leak of planned cutbacks during contract talks might indicate some "gamesmanship" on the part of negotiators, who could be trying to increase pressure on one side or the other.

Still, it is no secret that GM wants and needs to shrink further, he added: "They are going to eliminate a substantial number of people."

GM closed unchanged yesterday at $46.125, after reaching a high of $47.375 earlier in the day.

A UAW spokesman had no comment on the report.

The union agreed to a three-year contract with Ford Motor Co. last week that provides for higher wages, continued full health-care coverage, job security protection and improved pension benefits. The UAW hopes to sign a similar contract with Chrysler Corp. before turning its full attention to GM.

Some analysts say GM cannot swallow a contract patterned after the one signed by the much-healthier Ford. They expect the UAW to grant GM some concessions.

One point that could help GM would be a waiver of the requirement that it replace every two retiring workers with one new employee. That would make it easier for GM to shrink more quickly. Typically, about 10,000 GM workers retire each year. So without the replacement requirement, GM could cut 30,000 jobs just through retirement over the next three years.

LTC More early-retirement offers also could help GM downsize and save money. It is estimated that each retiree costs the company $28,000 a year, while those on layoff cost GM about $46,000 a year.

Another way the company hopes to become more efficient is by selling poorly performing plants. Last week, it agreed to sell five component factories to an investor group headed by Richard E. Dauch, a former Chrysler manufacturing executive. The plants employ about 6,800 workers.

GM expects to lose money in North America in the third quarter because of plant closings for model changeovers. But it still vows to break even, before interest and taxes, for the year.

Another major hurdle for GM was highlighted by a study by Mr. Cole's group. It found that GM assembly plants are about a third less productive than those at Ford, measured in the number of worker-hours required for each car.

According to the study, if GM were able to buy more parts from outside the company, as Ford does, and squeeze the same level of productivity out of its workers as Ford does, it would need only about 184,000 blue-collar employees. That assumes it had about 32 percent of the domestic car and light-truck market. In 1992, GM had 33.9 percent of the U.S. market, selling 4.4 million vehicles.

GM officials said yesterday that reaching productivity levels similar to Ford's remained a priority, indicating they would need to reduce their work force well below their stated goal of 250,000.

But many said it seems highly unlikely that GM could cut so many workers by 1996 without sacrificing market share and hurting its profitability.

A major reason GM's plants are less productive is that its cars have many more parts and are more time-consuming to build. GM will not be producing cars designed to be assembled more efficiently until 1995, said Maryann N. Keller, auto analyst for Furman Selz in New York.

As a result, "It's impossible for them to get down that far by 1996," she said. Furthermore, she added, it "would cost GM a fortune."

One reason it would be so costly is that the UAW included generous job security provisions in the pattern-setting agreement it negotiated with Ford. Under the new provisions, GM probably would have to set aside $3.85 billion to pay workers it lays off, compared with $3.35 billion, most of which it has spent, under the last contract.

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