GM to Cut Costs Through Layoffs
GM has announced that it will eliminate 30,000 manufacturing jobs this month in hopes to eliminate costs and avoid bankruptcy. The layoff represents 27 percent of the companies manufacturing jobs in the U.S. and will achieve $7 billion in costs reductions by the end of 2006. GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity. Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp. GM lost nearly $4 billion in the first nine months of this year. Downsizing in this manner can have both positive and negative impacts. These decisions negatively affect the company’s employees and the communities in which they live and work. This is a good example of a business decision that while hurting some people will result in large benefits in the long-run.