GM Cuts Again, And It's Likely Not The Last
GM is trying to pull off a very tricky and painful double play.
On one hand it is moving as quickly as possible to downsize the second largest auto maker in the world. On the other, it is trying to show the Treasury Department and Washington lawmakers that it is a viable company worthy of more government aid.
In one week the company will give the Treasury Department an update on what it's doing and it's plan for getting back in the black. When that update is filed, don't be surprised if GM announces even more cuts as the company looks at whether it should shed more assembly plants.
GM is cutting another 10,000 white-collar jobs around the world, including 3,400 here in the U.S. That's 14% of its salaried staff. Those lucky enough to keep their jobs will have their pay cut.
Any other time this kind of cutback would be major news. With GM, in this economy, it's become just one more step the company has to take to stop the bleeding. And there's been plenty of bleeding. Consider this, in the early part of this decade; GM had almost 30 final assembly plants in the U.S. This year, roughly 18 plants are still operating. There are many in the industry who think GM could shut another 3 or 4 plants.
We could hear about more plant closings as early as next Tuesday when GM turns in its viability update to leaders in Washington. With GM already taking $9 Billion in Federal loans and waiting for another $4 Billion, it has to show Washington that it's moving quickly to re-organize the company. Cutting jobs and plants is one way it can show the Treasury Department it is making progress. It will be far tougher to convince lawmakers that it can re-structure billions in corporate debt. That will be a far tougher task.
With all these moves, one question continually comes up: Is GM making progress? Is this company moving closer to getting back in the black?
We won't know the answers to those questions for weeks, if not months. GM has yet to file its 4Q earnings, but even those numbers won't mean much because we all know the end of last year was one to forget. First quarter earnings won't come out until late April or early May.
So in the meantime all investors can do it watch GM make cuts and wonder if this auto maker is succeeding in truly re-making itself.
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