General Motors Continues to Downsize as Shift Eliminations and White-Collar Job Cuts are Announced

---

Researched by Industrial Info Resources (Sugar Land, Texas)--The downward spiral that is the multiyear reorganization plan for General Motors Corporation (NYSE:GM) (Detroit, Michigan) only continues to get steeper as the former No. 1 automaker has been forced to continue its program of buyouts, layoffs, production cuts, plant closures and shift eliminations at its North American facilities. Most recently, the automaker announced several plant closures as a result of the dramatically weakened truck and SUV market.

One of the facilities GM will close in 2010 is the Moraine, Ohio, assembly plant, which makes the Chevrolet Trailblazer, GMC Envoy, Buick Ranier, Isuzu Ascender and Saab 9-7X midsized SUVs. Initially, the job cuts were expected to begin at the beginning of 2009 at this facility; however, GM recently announced that the second shift would be eliminated on September 29, a loss of 1,000 jobs. The remaining workers, about 1,400, will be temporarily laid off in December for four weeks as part of a supply-and-demand ratio correction. The plant will officially close its doors in 2010. GM also announced a shift reduction at its Shreveport, Louisiana, plant.

The Shreveport assembly plant produces the GMC Canyon, Chevrolet Colorado and the Hummer H3. The future of the Shreveport facility is somewhat in limbo with the continued decline in truck and SUV sales. GM is trying to find a buyer for the Hummer brand, which would also affect the plant. The Shreveport plant is scheduled to remain operational, but that could change if sales continue to dramatically decline. As a result of the shift reductions in Moraine and Shreveport, GM will reduce total production for the year by an additional 117,000 vehicles, bringing the company's total production cuts to 300,000 units for 2008.

In addition to the hourly cuts and shift reductions, GM also plans to reduce white-collar jobs. GM will cut 15% of its salaried work force in the United States and Canada by November 1. Early retirement is one option for these types of cuts, but other buyout options will certainly be considered after the cuts begin. During the first half of 2008, the majority of the job cuts performed at GM took place within the hourly workforce.

These cuts in both jobs and production are clearly necessary for GM, as its sales numbers have been on a constant slide for over a year. Rising oil and gas prices have decimated automotive sales across the board, especially with automakers like GM that had depended on truck and SUV sales for years. Now the chickens have come home to roost as GM, along with both Ford Motor Company (NYSE:F) (Dearborn, Michigan) and Chrysler LLC (Auburn Hills, Michigan), have been forced to make dramatic reductions in the production of these types of vehicles while scrambling to boost the production of smaller vehicles that are more fuel efficient -- something the consumer is clamoring for as budgets are tightening.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.