GM cuts 30,000 jobs
Last Tuesday, GM announced it was cutting 30,000 jobs and while this news has been widely anticipated, it sounds a lot worse once announced. In recent years, the Big Three (really the Big Two because Daimler-Chrysler is German owned) have had to deal with among other things, declining market share, massive recalls, high labor costs, and of course, soaring healthcare costs. I want to address three issues in particular, management, healthcare costs, and the jobs bank.
First let me qualify my statements and let readers know that I do market research for the automotive industry.
But the first issue is management because the classic showdown in labor negotiations boils down to management versus the Union. But in defense of the Union, it is management who is responsible for designing these vehicles that the market is not responding to. So why should the Union folk suffer for management’s lack of innovation? Just google the 2006 Ford Explorer’s door handles and read how many customers are disgusted by the lack of utility of such a poorly designed component of the car you use all the time. I remember listening to a podcast on NPR’s Motley Fool and hearing acclaimed management guru Peter Drucker (who recently passed away) talk about how corporations need to understand that they exist for the pleasure of their customers. But back in the day when the Big Three were pushing towards seventy percent market share, I am sure that advice was viewed in reverse. But Rick and Bill should heed that advice now and not focus on so much competing with Toyota but competing with themselves for producing quality vehicles. The rest will come easy.
But easy times have not befallen Unionized workers. Anyone reading anyone’s news know about Delphi’s offer to cut their workers pay by up to 65%. Cuts like that are drastic, especially during the holidays and I empathize with all the UAW members who are facing tough times right now. But here is where I place the blame at the foot of the UAW. My point is simply that these cuts could have been phased in over a number of years. And for the UAW to look up and act surprised that management would ask for such sacrifices I think is disingenuous. I think the ideal goals for the UAW should not be to only defend and fight for their members, but also collaborate with management so that the company as a whole can remain not only profitable, but also competitive. But if you want to keep it real, the Unions have been eating quite well. I am referring to salaries, overtime pay so crazy that overtime becomes a permanent part of you schedule, and a healthcare plan that you make yourself sick just to be sure that it is this good.
Speaking of healthcare, it is painfully obvious that the Big Three are bogged down in part by their healthcare costs, which makes me wonder why there is not a push for a national health care plan. For all the conservatives who are servants of corporations, a nationalized single payer healthcare would do wonders for the economy. Think of it as a tax cut. If a major chunk of insurance was guaranteed by the federal government, then domestic firms could work on this thing called innovation and quality so that our all-American firms (like GM) could regain some of their market share. The American public gets upset at seeing jobs go overseas but Wall Street puts immense pressure on our corporations to lower their costs. Therefore, the benefits of nationalized healthcare are not just limited to the 43 million people without healthcare so what is the problem? Special interests have taken our country’s political landscape by hostage. And the sad fact is that American firms are still ignorant enough to believe that we can grow revenues without cutting costs. We are facing a new “flat” economy (as put by New York Times columnist Thomas Friedman so it is best that American corporations take proactive steps to get lean and competitive before they die the death of a thousand cuts. Or end up like GM and end up having to make 30,000 cuts.