DETROIT, June 1 (Xinhua) -- Writer of A Savage
Factory: An Eyewitness Account of the Auto Industry's Self-Destruction Robert
Dewar said here on Monday that the most important reason for GM's bankruptcy
should be the high labor costs.
And almost all the interviewees in Detroit shared the
same opinion that labor costs should be blamed for the 100-year-old GM's
According to Dewar, it wasn't poor fuel efficiency,
bad design, or foreign cars that rocked the nation's auto industry. It was poor
management which resulted in higher and higher labor costs in the auto plants
that spawned the beginning of the end of the American car.
How high on earth the labor cost is in GM plants?
Well, you may find answers among the numbers mentioned below.
On its website GM released the total of both cash
compensation and benefits provided to GM hourly workers in 2006 amounted to
approximately 73.26 U.S. dollars per active hour worked, including39.68 dollars
in cash compensation and 33.58 dollars in benefit or government required
programs, such as pensions, group life insurance, disability benefits, and
supplemental unemployment benefits and so on. However, the costs used to make a
Toyota car in the U.S. plants were only 48 dollars per hour.
According to a report released by Harbor-Felax, a
famous auto consulting company based in Detroit, health care is the biggest
chunk of labor cost. For instance, to make a vehicle needs 1,635 dollars on
health care for active and retired workers in the United States, while Toyota
pays only 215 dollars for active ones.
So huge a cost for labor in GM not only eroded the
earnings, but also made the vehicle produced by GM much less competitive than
"It is all because of the union. UAW (United Auto
Workers) is so strong in the auto industry that they have the ability to ask for
higher and higher salaries for its members, or there will be a strike," said
Wenyu Lian, a Chinese staff project engineer who has worked in GM for many
"The hostility between union and carmakers made the
situation worse," Dewar told Xinhua.
In 1998 and 2007, the UAW organized two strikes,
which made about 6 billion dollars lost because of nationwide phase-out
Fortunately, both GM and the union have realized the
severity of huge labor costs.
In 2007, GM negotiated the 4-year labor deal with
UAW, which is supposed to expire in September 2011, shifts the obligation for
about 46.7 billion dollars in retired UAW worker health care from the company to
the union, with the company pouring about 26.5 billion dollars into a trust fund
with the name of Voluntary Employees Beneficiary Association run by the union.
With the agreement executed, GM former CEO Wagoner
said the total hourly labor costs dropped 6 percent in 2007, from 73.26 dollars
in 2006 to around 69 dollars per hour.
After last November, GM's suffering bankruptcy
threats forced UAW to make further concession. On May 21, GM and UAW reached a
tentative agreement to lower more labor costs, which was ratified by the members
of UAW on Friday, just three days ahead of GM's deadline of Monday for
The latest agreement entitles GM to lay off workers
and eliminates a couple of medicare and subsidies. It is estimated that will
reduce the labor costs for about 1.2 billion dollars per year.
Diana Tremblay, GM vice president of GM's Labor
Relations pointed out that the innovative agreement "will enable GM to be fully
competitive and has eliminated the gap with our competitors."
Obama says U.S. gov't to invest
additional $30 bln to help GM
WASHINGTON, June 1 (Xinhua) -- U.S. President Barack Obama promised on Monday
that the U.S. government will invest additional30 billion dollars in GM, which
he was confident will emerge from the bankruptcy protection process quickly.
"I recognized the importance of a viable auto industry to
the well-being of families and communities across our industrial Midwest and
across the United States," Obama said hours after GM filed for bankruptcy
Republicans, business lobby attack
Obama's GM plan
WASHINGTON, June 1
(Xinhua) -- U.S. Republicans and a leading U.S. business lobby on Monday
assaulted President Barack Obama's plan to take a 60 percent ownership stake in
General Motors (GM).
Republican National Committee (RNC) Chairman Michael
Steele, said in a statement that the plan "is nothing more than another
government grab of a private company and another handout to the union cronies
who helped bankroll his presidential campaign." Full story
GM to cut 14 plants by 2012,
reaffirming to build small car in
DETROIT, June 1
(Xinhua) -- General Motors Corp. announced on Monday that it will close or idle
14 plants in more than two years, just several hours after the troubled carmaker
filed for bankruptcy in New York. GM also reaffirmed it will build a small car
at one of its U.S. assembly plants as it announced on last Friday.
The manufacturing plan reduces GM's total number of
assembly, power train and stamping facilities in the U.S. from 47 to 33 by 2012.
GM indicates the new company emerging from the bankruptcy in about 90 days will
achieve full capacity utilization of its assembly operations in 2011, two years
ahead of what was scheduled in its Feb. 17 viability plan submission. This will
result in lower fixed costs and lower and more efficient capital investment. Full story
Toyota to continue joint venture with
TOKYO, June 1 (Xinhua) -- Toyota Motor Corp. said
Monday the company will continue its car manufacturing joint venture with
General Motors Corp. in California even after the bankruptcy filing by the
ailing U.S. auto giant.
"We hope to continue for our part," President
Katsuaki Watanabe told reporters in Tokyo. "The GM side also wants to continue
since it is a good factory."Full story
GM bankruptcy filing to have no impact
on China business
SHANGHAI, June 1
(Xinhua) -- The bankruptcy of General Motors Corp. in the United States will
have no impact on GM's operation in China, GM China Group said here Monday.
"Our operations across China will operate normally," said Kevin
Wale, president and managing director of GM China Group.Full story
GM CEO: China will continue to be GM's
key partner of business
YORK, June 1 (Xinhua) -- General Motors CEO Fritz Henderson said Monday that
China will continue to be a key partner of business of GM.
Speaking at a press conference in GM's New York
building, Henderson said that GM's venture in China is a critical part of GM,
saying its business in China in "growing very fast."Full story
GM decides not to abandon its
headquarters in Detroit
June 1 (Xinhua) -- The largest U.S. automaker General Motors which has filed
Chapter 11 bankruptcy will not abandon its headquarters in Detroit's Renaissance
Center as part of its restructuring, the Detriot News reported Monday.
President Barack Obama told Michigan's senior members of
Congress during a call Sunday night that GM will remain in the RenCen, despite
enticements from the city of Warren to move there, a congressional aide briefed
on the matter said. Full story
Brown says British carmaking jobs be
saved after GM filing for bankruptcy
LONDON, June 1 (Xinhua)
-- British Prime Minister Gordon Brown said on Monday that he is confident that
many jobs at British carmaker Vauxhall can be saved after its parent company
General Motors Corp (GM) filed for bankruptcy protection.
"We are determined to save as many of the Vauxhall jobs as
possible," Brown told Sky News in an interview. "We are confident that we can
save a large number of jobs."Full story
80-year-old Canadian retiree saddened
by GM's bankruptcy
June 1 (Xinhua) -- Beverly Belosky has been fighting for her equal rights for
the entire 34 years she worked at General Motors's plant in Oshawa, about 60 kms
east of Toronto.
At age 80, the GM retiree is still fighting to
protect the pensions she once thought was secured. Full story
GM kicked out of Dow auto classified
NEW YORK, June 1
(Xinhua) -- General Motors Corp. will be removed from the Dow Jones Automobiles
& Parts Titans 30 Index after the automaker filed for bankruptcy on Monday.
GM will be replaced by Japanese Sumitomo Electric
Industries Ltd. in the classified index. And the change will be effective before
the opening of trading on Thursday. Full story
Cisco, Travelers to become new members
of Dow, replacing GM, Citigroup
June 1 (Xinhua) -- Networking company Cisco Systems will replace General Motors
Corp. (GM) in the Dow Jones industrials index, while insurance giant Travelers
Companies will take the berth of ailing bank Citigroup in the index, Dow Jones
announced on Monday.
The announcement of the changes of the 30 stocks that make
up the best-known benchmark of Wall Street comes as GM, the world largest
automaker, filed bankruptcy protection. Full story
Iconic U.S. auto giant GM declares
NEW YORK/DETROIT, June 1
(Xinhua) -- In the largest industrial bankruptcy ever seen in U.S. history,
General Motors Corp., the top U.S. automaker and once the world's largest
corporation, filed for bankruptcy protection on Monday.
The Detroit-based company, for decades a symbol of
American manufacturing supremacy, corporate culture and even lifestyle, filed a
Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of
New York early Monday morning. Full story
GM bankruptcy filing
DETROIT, June 1
(Xinhua) -- Board of Directors of General Motors Corp. confirmed its
authorization of the top U.S. automaker's filing for Chapter 11 on Monday,
according to a company statement.
Kent Kresa, chairman of GM Board of Directors, said the
decision was made "with regret that this path proved necessary despite the best
efforts of so many." Full story
U.S. automaker giant poised for
BEIJING, June 1 (Xinhua) -- The No. 1 U.S. auto
maker, General Motors Corp., is poised for bankruptcy protection on Monday as a
way to seek a rebirth in the wake of a similar move by its rival Chrysler about
one month ago.
The GM, with a history of more than 100 years, is set
to deliver paperwork for its bankruptcy protection at 8 a.m. EDT (1200 GMT), the
largest bankruptcy protection case in the U.S. industrial history, said informed
sources who asked not to be named. Full story
Backgrounder: Burning questions about
June 1 (Xinhua) -- The largest U.S. automaker General Motors Corp. filed for
Chapter 11 bankruptcy on Monday, and a Dtroit News report on gave some questions
and answers on the automakers' bankruptcy on the same day.Full story
Special Report: Global Financial Crisis