General Motors to cut workforce by 30,000
World’s largest automaker General Motors has finally admitted that they would be cutting their workforce by around 30,000 workers to cut costs and move back to profitability. In addition, the company is also planning to close as many as 12 plants in the US and Canada by 2008. The company has around 173,000 workers in the North America and this cut means that they would be shedding around 27% of their workforce in the region.
This action is necessary if we are to believe the company’s chairman and chief executive Rick Wagoner who recently said that it was necessary to “get costs in line with our major global competitors”. This step is expected to bring down the manufacturing capacity of the company from current figures of 5 million to around 4.2 million vehicles per year.
General Motors have already made losses of around USD 4 Billion in the current year itself as it face competition from its Japanese counterparts offering reliable and more fuel efficient cars and consumers have developed a liking for them considering the ever rising fuel prices in the world. Even worse, the company share price has dived 40 per cent and its immediate prospects look bleak.
The company is expected to face even worse problems in the near future, as their major parts supplier Delphi has gone into bankruptcy and the workers union can go on strike any moment on the issue of downsizing and wage cuts.