Financial Collapse RSS

Feb 10, 2009

GM Slashes 10,000 Jobs and Executive Pay; Wal-Mart Cuts 800 Jobs

A government grant of $9.4 billion hasn't helped General Motors, one of the nation's Big Three automakers, retain its workforce.


GM today announced it will cut 10,000 jobs in May and continue global layoffs through the year. Mid-level salaries will be decreased 3 to 7 percent and executives will take 10 percent pay cuts. With a severe drop in car sales and the need for restructuring, GM joins a list of companies letting go of employees to keep their businesses afloat.

GM has received $9.4 billion in federal assistance and expects to get $4 billion more this month. In the past few months, GM has been under scrutiny after appealing for and receiving a $13.4 billion bailout. The company, along with Ford, was forced to sell its jet fleet as CEO Rick Wagoner arrived in Washington in November on a private plane while pleading for taxpayer money. All three automaker CEOs flew in corporate jets to Capitol Hill.

Despite the claims of scaling back, the company also recently showed up at the Super Bowl as a corporate NFL sponsor, continuing to offer the newest Cadillac to the MVP and providing courtesy vehicles for VIPs.

GM has already cut back on benefits and payroll of salaried workers since November. The company is still in talks with the United Auto Workers union about worker buyouts in an attempt to decrease outstanding debt. The news of job cuts comes the day after GM vice chairman Robert Lutz announced his retirement. Lutz will be replaced by Thomas Stephens, GM's executive vice president of global powertrain and quality division, at the end of the year.

With more than 30 years of experience, Lutz claims that GM will pull through the recession under the automaker's viability plan to be submitted to Congress Feb. 17. The proposal will undoubtedly downsize the automaker, despite the federal financial assistance.

While he was not present at the congressional bailout hearings, Lutz's uncanny response to the increasing criticism of GM CEO Rick Wagoner was clear in a New York Times interview: "This is the equivalent of the Incan or Mayan days when everybody would go to the top of the volcano and throw a virgin in."

Lutz is well-known in the media for his outspoken remarks and in the industry as a larger-than-life revolutionary executive. He has worked for all three of the nation's major automakers, starting at GM in 1963 and returning in 2001 under the hire of Wagoner.

Source : ABC
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