Mixed Layoff News; GM Lands a Broadside

Seasonally adjusted, 106,238 employees received proveribal pink slips last month, the fewest number of monthly layoffs since October 2000, according to the Bureau of Labor Statistics (pdf). However, two days earlier, General Motors landed a broadside on its union, reporting that it would layoff about a quarter of its North American factory workforce. This is the largest layoff pronouncement since the January 2003 announcement that Kmart would cut 37,000 jobs. It follows an earlier layoff announcement from Ford and the continuing drama of bankrupt parts supplier Delphi.

GM also said it would close about a dozen plants. One of those factories, in Flint, MI, employs 735. In the 1980s, GM employed about 80,000 in Flint; after this latest round of cuts, the company will employ about 20,000. The United Auto Workers was born in Flint in 1937, an outshoot of a strike.

Flint was featured in Michael Moore's 1990 movie Roger and Me, which chronicled the tale of the modern factory town. Census data show that one-quarter of the town's 125,000 population lives below the poverty line. In an e-mail, Moore wrote:

"General Motors continues its destruction of cities like Flint and the American middle-class — all because GM's executives never bothered to take a Honda or Toyota for a test drive and figure out what makes a good car sell."

Prior to the GM announcement, Ford (the number two auto-maker) announced it would cut 10 percent (4,000 jobs) of its white collar work force. Additional cuts are expected after the new year. The company has already eliminated about 3,000 salaried jobs in North America this year.

Health care and pension costs -- which are greater for American firms than foreign ones due to private versus public social support systems -- have been given by industry as a reason for the belt-tightening. In addition, sales of large SUVs have dropped due to increased gasoline prices; the SUVs have traditionally been principle profit centers for Detroit.

In the first of many ripple effects, Continental Tire North America is cutting about 300 jobs from its workforce.

In related news, the UAW is protesting bankrupt Delphi's proposal to provide bonuses to executives: "Delphi's Chairman Steve Miller recently proposed $90 million in cash bonuses, while seeking a 60 percent pay cut for workers." The bonuses would go to about 600 executives under the proposal; concurrently, about 24,000 UAW members get steep cuts in wages and benefits.

Demonstrating just how disconnected executive compensation is from company performance, from 2000-2004, Delphi Chairman J.T. Battenberg III received $21.9 million in salary and stock while the company lost more than $4 billion.

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