The loss of contract jobs darkens grim Mich. outlook

Christine Tierney / The Detroit News

General Motors Corp. will lay off about 500 contract employees, many of them engineers and designers at its technical center in Warren, on Friday as part of the automaker's effort to downsize its money-losing North American operations.

"This is a very challenging time, and these are very difficult decisions for the company," said GM spokesman Robert Herta. "It's all about aligning the work force with our business needs."

GM said the cuts are part of a previously announced plan to reduce its U.S. white collar work force by 7 percent in 2006. The reduction affects both direct GM and contract employees.

Many of the engineers whose jobs are being eliminated have already been contacted by the contractors that employ them.

Several said they were struck by the magnitude of the cuts, noting that GM has steadily eliminated contract jobs but in smaller numbers, 10 or 20 at a time.

The job losses darken the already grim employment outlook for Michigan, which is expected to lose jobs for a sixth straight year in 2006 despite the national economy's resilience. In the past year and a half, the state has lost more than 15,000 professional and business services jobs, a category that includes engineers and designers.

But the move also signals that GM is moving quickly to slash its costs in North America, where it lost $4.8 billion in the first three quarters of 2005.

Since 2000, the automaker has reduced its U.S. salaried and contract employee headcount by 32 percent, averaging annual reductions of around 5.5 percent a year.

In November, Chairman and CEO Rick Wagoner announced a restructuring plan entailing the closure of four assembly and six component plants and the downsizing of other facilities. In all, 30,000 blue-collar jobs will be eliminated by 2008.

The plan called for a steeper 7 percent cut in the ranks of U.S. salaried and contract workers. The company also has cut certain benefits for salaried workers.

In GM's effort to recover profitability in North America, where it is losing ground to Asian rivals unencumbered by huge legacy costs, the U.S. automaker is trying to make better use of its global operations and eliminate duplication of activities.

But for GM contract workers like Danielle Manzella, 30, who is losing her job as an interior components designer in Warren, the news is devastating.

Manzella, who is employed by MSX International, learned this week that she would not only lose her job on Friday but also the health insurance that covers her, her husband and 18-month-old toddler.

"I got a phone call last night, and they said my services will no longer be needed. Friday is my last day," said Manzella, who spent 6 1/2 years working at GM. "The cuts are big. There were 20 people in my row, and only four of them are staying. I'm young, so I'll be OK. But I wonder about the 56-year-old who sits next to me. We weren't expecting it."

One of her colleagues, D'Ann Munro, has been working at GM for 10 years through her company, the staffing agency Aerotek.

"You work here for so long, and you make the cut so many times that you think you're OK," Munro said. "So this is tough."


http://www.detnews.com/apps/pbcs.dll...TO01/601050415

 

White collar job losses... very clinical reduction of GM's workforce... UAW take note: you are not above all other GM employees, everybody is affected by GM's downturn.

See the light.

 

While it is horrible to see such a large number of people let go at such a time, It is what is needed to get things done.

 

Do you really think GM is getting by with less, or do you think GM is simply moving engineering & design work outside of the US? Labor is expensive in this country. It's not just the wage -- it's healthcare too. Get ready for grass shacks & dirt floors -> we've gotta compete against the ****-poor island nations.

 

While I understand the financial reasons why layoffs have to occur it still sucks for the workers regardless.

GM is really damned-if-they-do and damned-if-they don't in these scenerios. Sure they can continue propping up their business by borrowing money (robbing future profits) when the profits arent there, but at least those people would still have jobs. Or they have to start cutting cost by laying off some workers as 'one' measure to bring them back into profitability and inturn will be able to keep more people employed because the company will be able to survive.

There's a saying in business that goes "You buy management". Meaning that even if a historically poor performing company gets good management they will make the right decisions to get the company back on track. While bad management can ruin even the strongest and most profitable companies eventually.

The one main reason why top CEO's get canned is not that they're dumb or incompetent, only that they become too emotionally attached to a certain business-model (maybe one they help created in the past) and are unwilling to make the hard decisions to correct a systemic problem. So its often that new CEO (who might not even be as smart as the one who got canned) who has no emotional attachment to an old (non-performing) business-model of the past that can find the solution. The new CEO can look and the numbers objectively and make the hard choices that have to be made in order to survive in the short term and then hopefully be able to grow the business again in the future.

Often the CEO who is the best person for guiding a company through a short-term crisis is not always the best candidate for long-term growth and creating a grand vision of future (often they are two different personality types).

 

As far as engineering and design jobs go , GM simply seems to be following thru on exactly what they said they were gonna do . GM said they will be a global company , designers and engineers will be linked throughout the world on a live network with the capabilties of a couple different continents to working on the same project like they were in the next office over . Its really sad to hear about the individual stories of job loss , but this should have been done by GM LONG LONG ago . The sooner GM can streamline itself into very effcient global operation , the better off they will be . And about moving outside the US , there will be more cars being built here ( but not sold here ) and shipped overseas . Possible talk of the next Monaro being built here , as well as the Vauxhaul Lightning that will be built here .

 

I hope none of those people were responsible for the wonderful powertrains GM builds.
I'd hate to think they are losing strength in the one thing they do best.

 

If most of the workers are in fact contractors... I don't believe it will eat into the GM's core operations (i.e. Powertrain). Holden made the same cost-cutting move for engineers working on VE which was in an advanced stage of development anyway... although many of them went across the road to work for Toyota. So not all doom and gloom for the contractors.

 

True, the Federal Reserve (and it's new Fed Chief) might begin to start 'cutting' interest rates sometime in 2006 to prevent a recession by loosening the money supply and/or to prevent a deep drop in housing prices by making mortgage rates drop. The negative effect of this is that it will most likely cause the US dollar to drop in value. A de-valued dollar will make US-made products cheaper on the global market which is a good thing while on the negative side it will make non-American made items more expensive here for US consumers.

Historically the Federal Reserve always overshoots on raising interest rates (they should have stopped raising rates this past summer) and no suprise they will most likely start dropping rates again sometime in 06 and that will help the export-side of the US economy.



Here's some recent news from GM as well

 

I found a nice post on some helpful background info on this, but lost it temporarily. Anyway, it can be summed up....

These are contract employees, not regular GM Engineers. Usually they are hired for short periods of time (3 months/6months). To help out temporarily on a short notice basis when a company doesn't have quite enough manpower. They usually make 2-3 times the salary of regular employees to make up for the lack of job predictability. In short, it's not as dire as it sounds.

 

Great they think employee pricing (aka a reasonible price) was a dumb idea
It's nice to see the price of a new vehicle will now cost 1/3 the price of a house again.

 

Yeah, it would be much worse if they were "actual GM Employees".

And part of the reason they get paid more is they are not allowed the GM Employee benefits package. Pay only and you have to pick everything else up yourself (at least that was how it was for my brother.)

He wasn't confortable being contract and busted his ***** to get hired (at Cummins and he did). He did take a pay cut, but I think his benefits offset that some. I would never work contract, (at least with a young family)... Too unpredictable.

 

That is all complete bull $hit. Both contract and direct employees are affected. And that post about contract workers is false. I saw it posted on GMI also. There was a time where nearly 50% of GM technical staff was contract. Permenant contract workers. This was a game to hide head count and not have to pay permenant workers. Contract workers salary at GM for accounting purposes went against expense and were not counted as head count. When salary workers left the company they were generally replaced by permenant contract workers. I have known many contract workers over at GM and I assure you they were not getting 2-3 times the salary. And GM is/has been targeting their direct staff with cuts. Yesterday I was told that employees with less than 10 years of senority were on the chopping block in certain functions.

 

Well I'm sure they are getting rid of regular employees, but these 500 are "Contract Employees..."

"Permanant Contract Employee?"

 

There is a difference, I know what the hell I am talking about.