GM angers union with plan to cut 30,000 jobs

General Motors’ relationship with its biggest and most powerful trade union was at breaking point last week after the world’s biggest carmaker announced plans to cut 30,000 jobs and close up to 12 factories in North America.

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By  James Doran Published  November 27, 2005

General Motors’ relationship with its biggest and most powerful trade union was at breaking point last week after the world’s biggest carmaker announced plans to cut 30,000 jobs and close up to 12 factories in North America. Richard Wagoner, GM chief executive, revealed details of the company’s long-awaited turnaround plan last week in Detroit in an effort to reverse a falling share price and scotch rumours that it might soon file for bankruptcy. But no sooner had the restructuring plans been announced than the United Auto Workers Union (UAW) issued a terse statement implying that it would not allow the cuts to go ahead unchecked and that all future negotiations with the company were in doubt. “The UAW-represented workers impacted by today’s action are protected by our job security program as well as the other provisions and protections of the UAW-GM National Agreement,” Ron Gettelfinger, president of the union, said. “The UAW will do everything in its power to enforce those programmes and protect the interests of the workers impacted by today’s action.” At the same time GM is trying to renegotiate employment contracts with the UAW, to which the majority of its hourly paid factory workers belong. GM is struggling for survival in the face of mounting costs, falling sales and stiff competition from Asian carmakers such as Honda, Toyota and Hyundai. It is vital that the company is able to renegotiate a more flexible employment contract with the UAW before the current deal expires in September 2007. If the company is unable to reach terms with the union on the multibillion-dollar healthcare and pension schemes, the chances of it filing for Chapter 11 bankruptcy protection will rise dramatically. Gettelfinger cast doubt on the ability of the firm to renegotiate the contract after the announcement. “The actions covered by today’s announcement will be the subject of ongoing discussions and the 2007 negotiations between the UAW and GM. Today’s announcement clearly makes those negotiations much more difficult,” he said. Wagoner, who had previously announced 25,000 job cuts this year, is trying to reduce the troubled carmaker’s overheads, reduce capacity and return the North American operations to profit. So far this year GM has lost US$4.8billion. The plan will cut GM’s annual operational expenses of about US$41billion by US$7billion by the end of next year, Wagoner said. “The decisions we’re announcing today were difficult to reach because of their impact on our employees and the communities where we live and work,” Wagoner said. “But these actions were necessary.” GM is expected to try and begin negotiations with unions this week.

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