This week, General Motors announced a three-year plan to lower its costs. The plan calls for G.M. to reduce its number of workers in North America by thirty thousand. That is a cut of seventeen percent. The company says it will close all or part of twelve factories in the United States and Canada.
Its chief executive officer, Rick Wagoner, says the cuts are necessary for the company to compete. General Motors has lost more than four thousand million dollars this year. And that is not its only problem. In October its largest supplier, Delphi, sought protection in bankruptcy court after heavy losses.
General Motors is the largest automobile maker in the world. But the company has struggled against foreign competitors, especially the Japanese automakers Toyota and Honda. Forty years ago, General Motors controlled half the market in the United States. Now it controls one-fourth of it.
|Operations technicians work on inspection line at General Motors Saturn plant in Spring Hill, Tennessee|
G.M. will reduce production to better meet demand. It plans to produce just over four million cars and trucks a year in North America by the end of two thousand eight. That is thirty percent fewer than it built in two thousand two.
Industry experts blame the situation in part on poor decisions and vehicle designs that have not been very creative. Other reasons, they say, include costly health care and retirement payments.
The new cuts, and measures announced earlier, are expected to lower costs by about seven thousand million dollars next year.
The number of jobs to be lost, thirty thousand, is five thousand higher than Mister Wagoner had announced earlier this year. G.M. officials say they want to reduce employee numbers mainly through retirements.
Still, the United Auto Workers union calls the cuts unfair. The labor union says it will do everything in its power to enforce job security programs.
Union officials reject the idea that the problems at General Motors are because of high labor costs. Yet, they say, workers and their communities will be the ones who suffer because of the actions announced this week.
The current labor agreement requires General Motors to continue to pay workers even when factories close. And the company cannot permanently close factories without union approval. So the factories cannot officially close until the two sides reach an agreement in the next contract talks. Those will take place in two thousand seven.
Some industry experts say the union might not have much choice but to accept the job cuts and factory closings. They say the union has to be careful not to go too far. Too much pressure could send the company into bankruptcy court to seek protection from its creditors. Then all agreements with the union would have to be renegotiated.
IN THE NEWS in VOA Special English was written by Nancy Steinbach. Internet users can read and listen to our reports at voaspecialenglish.com I'm Steve Ember.