By on February 6, 2009

It’s T minus 11 days before Congress does the thumbs-up thumbs-down thing on the artist formerly known as the world’s largest automaker. GM is up shit creek without a paddle. The United Auto Workers aren’t going to agree to parity with the transplant assembly workers, as required. The bondholders aren’t going to exchange debt for equity, as required. The company doesn’t have a clue what to do about its brands or products, as required. There is no way whatsoever for GM to prove to your elected officials that it has a hope in hell of repaying the $13.4b loans already made—never mind the $100b or so needed to keep the ailing American automaker in business for another year. So GM CEO Rick Wagoner is doing the only thing he knows how to do, that he can do: cutting expenses. This time, it’s white collar workers for one simple reason: that’s all that’s left. Bloomberg tells of the $14m per year CEO’s decision to throw his remaining management to the wolves . . .

The company will include the plans in a Feb. 17 progress report to the U.S. government, said the people, who asked not to be named because the plan isn’t public. The total may match the more than 5,000 salaried positions eliminated last year, the people said. GM started offering buyouts to 62,000 union workers this week and is in talks with the United Auto Workers about trimming benefits.

“They need to be very aggressive,” said Dennis Virag, president of the Automotive Consulting Group Inc. in Ann Arbor, Michigan. “They need to prove they can be viable. To do that, they need significant cutbacks of both salaried and union workers.”

Horseshit. The key to success: take in more money than you spend. While GM’s CEO has been a ruthless cost-cutter, Wagoner and his mob have done sweet FA to increase GM’s ability to earn what’s commonly known as profit. It’s time to cut bait and fish.

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34 Comments on “Bailout Watch 378: GM to Sacrifice 1000s of White Collar Jobs...”


  • avatar
    Matt51

    White collar workers are the brains of the operation. Lay them off, there is nothing left to save. GM would just be Frankenstein in search of a brain.
    With Wagoner, they have the ab normal brain from Young Frankenstein.

  • avatar
    dejalma

    My gut says they will get the money because they
    are “making progress” but market conditions are different than what they were when they received the first round of money which means that have had to revise their plan due to the changing conditions.

  • avatar
    akear

    Wagoner might as well nuke GM.

  • avatar
    Edward Niedermeyer

    So much for the bailout preventing job loss. Damn that “prove viability” clause!

  • avatar
    tesla deathwatcher

    I’m trying to figure out what the $13.4 billion GM bailout bought. It looks like time. Not time to get closer to profitability, which might be worth something. But time to waste before dealing with the problem.

  • avatar
    PeteMoran

    If non viable business is artificially allowed to continue, structural change will not take place.

    There will then be no “bottom” to the recession.

    If there is no bottom there will be no business confidence; onward and downward.

  • avatar
    The Walking Eye

    So much for the bailout preventing job loss. Damn that “prove viability” clause!

    White collar jobs don’t matter, don’t you know. Engineers are expendable, but not the people who put the cars together.*

    *Yeah, it’s not all engineers, it’s a joke.

  • avatar
    PeteMoran

    Michael Moore was right! To paraphrase; “We’re gonna’ give these bozos billions of dollars to sack thousands of workers and they still won’t get it”.

  • avatar
    IOtheworldaliving

    According to the referenced article, one of the benefits of this plan is to encourage the hourlies to make more concessions, because that way the pain will be “shared” amongst all the “stakeholders.”

    So sacrifice is the correct word, here–in the Apocalypto sense of the word.

    @RF: I see some of my former GM colleagues in this video. :)

  • avatar
    IOtheworldaliving

    Wow! Wasn’t expecting the picture change! The stone was pretty cool, actually. Now if we can find a picture of Muppets getting sacrificed…

  • avatar
    dejalma

    According to the referenced article, one of the benefits of this plan is to encourage the hourlies to make more concessions, because that way the pain will be “shared” amongst all the “stakeholders.”

    Sounds like “You didn’t do what we demanded. Now, we start killing the hostages.”

  • avatar

    A new damage comes
    It’s a faceless poison
    A new world order
    It’s new damage done

    The wreck is going down
    Get out before you drown
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    A new damage comes
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    A new world order
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    Get out before you drown
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    Get out, yeah, before you drown
    Get out, get out, oh yeah

    New damage comes
    It’s a new word for plague
    A new world order
    A new word for hate

    The wreck is going down
    Get out before you drown
    The wreck is going down
    Get out before you drown

    Get out, get out, get out
    Before you drown, before you drown
    Get out, get out, get out, get out
    Get out, get out, get out

    Before you drown, get out
    Get out before you drown
    Before you drown
    Before, before you drown

    © YOU MAKE ME SICK I MAKE MUSIC

  • avatar
    truthbetold37

    There is so much redundancy in HR/Marketing/Finance that this could be achieved. The problem is they will cut across the board leaving Purchasing, Manufacturing, and Engineering weakened. The keys to a successful OEM.

  • avatar
    HeBeGB

    Again, it’s the number of cars sold that determines the number of jobs…it has nothing to do with how many car companies exist. The bailout as it has been constructed so far will do nothing to save jobs. Only people buying cars is gonna save jobs, and not enough people will feel comfortable doing that for quite awhile. It would be better just to use the bailout money to offer buy-outs to the (soon-to-be-displaced-anyway) workers directly from the gov’t.

  • avatar
    John Horner

    “The total may match the more than 5,000 salaried positions eliminated last year, the people said.”

    This kind of stuff is a real head scratcher. How on earth could a company which has been downsizing for my entire adult life still have thousands of white collar (not union protected!) excess workers? Can it really be that those 5,000 people tossed out last year were not contributing enough to sales and profitability to pay their way?

    If GM really has had 10,000 professionals it doesn’t need, then the management which hired and promoted them over the past several decades needs to be fired first!

    We have reached the tipping point where so many good paying jobs have been sent offshore that there are now no longer enough people making good middle class incomes to buy all the stuff which is being imported. For a while, excessive borrowing was used to hide the trend, but the excess borrowing is over and the trend is clearly revealed.

    People with good credit and reasonable down payments can still get loans, but there aren’t enough of those people.

  • avatar
    mtypex

    “White collar workers are the brains of the operation. Lay them off, there is nothing left to save. GM would just be Frankenstein in search of a brain.”

    No, then they would be a Chrysler. When you fire everyone but still try to pass off as a living corporation, you are a zombie.

    Does anyone even report to the Tech Center anymore? I miss good ole exit 78/79.

  • avatar
    DrX

    @ John Horner

    People with good credit and reasonable down payments can still get loans, but there aren’t enough of those people.

    You’re dead on there. And this is what really baffles me about a lot of the government’s response to this entire crisis. The politicians seem to think that what needs to happen is to get some money into the hands of the middle class and get credit moving again so that the middle class can go back to spending like there’s no tomorrow. What they don’t seem to understand is exactly what you point out above. Many “middle class” citizens simply can’t afford to spend or take on any more debt. A simple look-see at the national savings rate over the last few decades is extremely telling. For ten years, many people have been spending nearly every penny they make. There seems to be a fundamental lack of understanding on the part of the politicians and it’s not even a partisan thing, neither side seems to understand the futility of giving people $600 tax rebates or getting credit moving again. The problem is of much greater magnitude than that. I suppose I shouldn’t be too surprised at this, given that essentially every level of government in the country, be it fed, state, or local, is in debt up to its eyeballs. Our governing representatives seem to think that you can simply borrow into eternity without consequence and that’s where I think the fundamental disconnect lies. So let’s all step up to the plate to $20 trillion in national debt! Apologies for the digression into politics.

  • avatar
    parimento1

    They will get their bailout because the government will not let them fail. The gov’t just made these terms to make it seem like they won’t just give the money away, but in the end, the gov’t won’t enforce the rules because they are deemed too big to fail and more importantly I am sure the UAW and GM donated a lot of $ to their campaign.

  • avatar
    mikey

    The scary part is that the smart/younger better educated ones have already moved on.Next GM will dump the ones without a friend in high places.
    After that it will be the older experienced
    guys.What your left with is the yes men and the wannabes.

    One thing is for sure there will be no impact at the high levels.

    Yes, it is indeed hard to convince the hourly guys to swallow concessions.Its even harder when a guy sees hundreds of co workers laid off with no recall.Yet white collar numbers never change.

  • avatar
    shaker

    GM is screwed, Chrysler is screwed, Ford is in big trouble.

    Any money injected into the economy will get sucked up into the dry sponge of debt, lower housing values, and socked away in 2% savings accounts and mattresses. No one will buy a car unless it’s an absolute necessity, and people have grown up enough to realize that a new car is a luxury at this time.

    The only way to save the carmakers is to split a contract between the 3 (or 2) to upgrade the entire government vehicle fleet to more fuel-efficient models (a good example: Thousands of suburban and rural Postal Service vehicles would save millions of gallons of fuel if they were hybrids).

    Sort of like the “jeep” contracts during WWII – all domestics got involved.

  • avatar

    until the marketing changes, nothing else matters…

    here’s a little ditty I wrote years ago, still apllies…

    AS SHARE GOES BYE

    You must remember this,
    A loss is just a loss.
    The pie is still in the sky.
    Fundamental marketing does apply,
    As share goes bye.

    And when Toyota’s up by two,
    We only get Daewoo,
    On Rick Wagoner we cannot rely.
    No matter what the economy brings,
    As share goes bye.

    Rebates and confusion, way out of date,
    Execs full of themselves, ready for their fate,
    Buyers want self image, hope it’s not too late,
    For it’s that we must supply.

    It’s still the same old story,
    The flight of sales and glory,
    A case of change or die.

    The world will always respect a winner,
    As share goes bye.

    Second Verse:

    Now also remember this,
    Their ass I will not kiss.
    The numbers tell no lie.
    Good times no longer apply,
    As share goes bye.

    And when we drop another two,
    The Board will not say boo.
    On just who can we rely?
    No matter what Paul Ballew sings,
    As share goes bye.

    Plenty of new products, seen their next update.
    Execs shuffled around, really same old slate.
    Buyers shopping elsewhere, regardless of the rate.
    Competition growing stronger, that we can’t deny.

    Its really getting boring,
    Toyota and Nissan soaring,
    A case of reality defy.

    The industry is losing its leader,
    As share goes bye.

    Best played in S (as in sales) Flat.

  • avatar
    63CorvairSpyder

    @mikey,

    Good morning. You said, “What you’re left with is yes men and wannabes”.

    Very true, and their friends the “brown-noses and blowhards”.

  • avatar
    Bill Wade

    shaker :
    February 7th, 2009 at 8:30 am

    GM is screwed, Chrysler is screwed, Ford is in big trouble.

    The only way to save the carmakers is to split a contract between the 3 (or 2) to upgrade the entire government vehicle fleet to more fuel-efficient models (a good example: Thousands of suburban and rural Postal Service vehicles would save millions of gallons of fuel if they were hybrids).

    Sort of like the “jeep” contracts during WWII – all domestics got involved.

    So after the one month of production it would take to replace every single government vehicle, them what?

  • avatar
    no_slushbox

    I’ve said this before.

    -The parastic Dealers have state law.

    -The featherbedded UAW workers doing work a Chinese peasant or robot could do have their contract.

    -The debtholders (that GM had to go into massive debt with because of the losses their dealers and the UAW caused) have basic contract law.

    Short of Chapter 11 The only way GM can cut costs is to gut the company of nonunion engineers, designers and managers that actually make the company work. And to cut the benefits of the existing engineers, etc. so that only the least qualified employees will remain or apply.

    So much for the “good jobs” that the Detroit apologists whined about. All we will be left with in a couple years is shitty outdated cars made by overpaid simple assembly employees and sold at massive, money losing discounts by cross competing dealers.

    There will be no engineering or design jobs left.

    That is why Chapter 11 was, is and will be the only way to save GM, and Ford if it slips onto the dole.

    This weekend at Bernie’s charade is killing GM while the leaches (dealers, UAW) get paid off. They don’t care if the US has an auto industry survives, they just want it on government welfare long enough for them to get paid.

    And that is the truth.

  • avatar
    obbop

    Events tend to be interpreted a bit differently down here in the economic mire of the working-poor class where so many of us have been shoved deeper into the mire of poverty while competing with millions of illegal alien competitors.

    Part of me wants all those above the folks at my socio-economic level to fall down, to lose their jobs, to experience life down here, performing those nasty jobs that need doing yet the elite class claims Americans will not do them.

    But, I am aware the elite class will always do well, especially in comparison to the commoners.

    Whoever controls the reigns of power will ensure the (ahem) best and brightest maintain their lofty perches above the commoners.

    I still believe it is class warfare.

    If economic conditions continue and an increasing number of y’all come down to my level, well, Viva La Raza, esses and vatos.

    Hope you adore diversity and multi-culturalism because what the elite owned mass media has shown you folks ain’t nuthin’ like the reality of being confronted by economic competitors who, too often, despise you for being an Anglo then possess additional despisement for being a USA citizen.

    Welcome to the brave new world wherein the elites possess even more wealth and power while the masses enter a life-style more akin to a 2nd-world country than that American Dream-like rhetoric implanted into so many folks heads.

    Maybe I will see you folks at the dumpster some day, dining delightfully. I am not at that stage yet but I can envision that coming about in the not-too-distant future.

  • avatar
    Happy_Endings

    GM is simply announcing it’s new line of layoffs like last year ….

    http://www.theonion.com/content/news/gm_introduces_new_2008_line_of

  • avatar
    Canucknucklehead

    For ten years, many people have been spending nearly every penny they make.

    Actually, people in the USA have been spending more than they have been making for much longer than that. It started with “supply side economics” in the Regan era. The mortgage interest tax deductibility laws in the USA encouraged people to use their homes as an ATM. All of it relied on an expanding market and money supply. Now it has all collapsed because there was no real wealth creation behind it. Besides, the big 2.4 were right into it and at least 50% of the paper they wrote was subprime which is why they don’t lease anymore. Johnny Clockpuncher ain’t gonna buy a Tahoe if he has to actually finance it since he can’t afford the payments.

    The American public has been fed a bill of BS for the last 30 years and it is going to be a huge mental leap to get beyond it. The whole subprime fiasco along with the investment banking rules courtesy of Uber-Scumbag Phil Gram are coming home to roost and I am not confident that my American friends can see their karma has been run over by their dogma

  • avatar
    snafu

    Good stuff JH, the GM spin off currently in C11, have whittled their way down to a skeleton crew of engineers but for some reason are still heavy in the middle management area. TBT37 is right. What I can’t figure out is how is it that I, at 3, a lowly mechanical engineer have no dept? My income would allow me to splurge on whatever it is I wanted yet I am disciplined in how I spend. I do not come from a wealthy family or a moderately rich background. It’s in the education and the mentality that you jackasses have to “keep up with the Jones”. Wagner, you and your staff need to be what GM is about and take a pay cut. I would have more respect to see him challenge his staff and then their staff go the extra mile. If you don’t want that job Richard, there are plenty of people of whom I personally know, well off business men, that would work that for free just to get it back in the game and say look what I did. Get rid of your white collar jobs if they are not important now why were they then? Looking at the org chart there are 9 levels until you get to a staff engineer, Wednesday, Thursday, Friday, it’s the end of the week! A lot of grab ass in the middle. You’ve done the math, the sum you arrived at shows, if the executive staff followed suit and took cuts in salary then the concessions at union level did not have to be so dramatic, you and your executive hair.

  • avatar
    bluecon

    What a soap opera.

    President Obama can’t let the UAW go down the tubes. Expect lots of taxpayer money to be thrown at them.

    The Dems are already readying the legistlation to cancel the secret vote when the UAW want to organize the companies. Maybe if the Dem’s can help the UAW organize the transplants then they can deal withm the rest of the mess.

    It is only money. You just borrow and print more. Zimbabwe is the latest expert on this.

  • avatar
    TireGuy

    Whatever GM does, and whatever gap in the end will remain to make it viable – Obama still has no chance to let GM go bankrupt. This would be a terrible start for his presidency. Therefore, I am sure The D 2.8. will get their bailout, notwithstanding that they will not fulfill the requirements set out in December.

  • avatar

    TireGuy

    Agreed. Chrysler though… I’m with Ken Elias on this one: shotgun marriage with GM.

  • avatar
    mel23

    Delphi announced a few days ago that its ‘enterprise value’ ‘substantially below’ $7.2B and might be below post-bankruptcy debts. So the debtors, JP Morgan and GM, will have the option of liquidation or taking ownership. Other suppliers can’t be far behind.

    It seems like it’s too late for Obama or even Superman to fix this collapsing economy. It gets noticeably worse on a monthly basis, and faster than any kind of bandage can be developed and applied. Time for everybody to look for a place to land.

  • avatar
    npbheights

    @tireguy.
    Let us all not forget that GM and Chrysler failed during the George W Bush administration. If he had not used his executive power to dole out billions, this would not be an issue.

  • avatar
    TireGuy

    npbheights :
    February 8th, 2009 at 10:30 pm

    @tireguy.
    Let us all not forget that GM and Chrysler failed during the George W Bush administration. If he had not used his executive power to dole out billions, this would not be an issue.

    Sure – although Obama certainly has discussed this with Bush before and agreed to this. What I find curious in this regard is that the real democratic organization – the House and the Senate – do not agree on such measures, and that then the Presidents overrules this, without a real public outcry.


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