"GM stock is up .50 cents a share on news that 25,000 employees..."

[kentuck]

will lose their job in the planned jobcuts." Stock goes up when 25,000 people lose their jobs. Explain the end result of this type of strategy and thinking. When no one has a job, the stock will go thru the roof?

[evlbstrd]

1. Bottom line, baby.

They never factor in the lives they disrupt. And the stockholders love it.

[kentuck]

They said they expect to save $2.5 billion with the cuts....

That's the bottom line, you are correct.

[evlbstrd]

11. GM had to respond to the horrible financial reports.

That's the most expedient response for a profit-oriented enterprise.
Corporate Capitalism just sucks out loud.

[uncle ray]

23. which, if the rest of the fiscal year follows the first quarter,

they should only be a billion or two in the hole for the year.

[OneTwentyoNine]

27. Good...the CEO and others can give themselves a big ass raise...

Thats the way the game is usually played with the Wall Street idioits. Cut costs,never mind production is still going down and all the three piece suiters get a raise and declare a big dividend.

They make millions a year running a 100 year old company into the ground.

[TheFarseer]

33. 100% correct

I bet they don't save a dime from these job cuts. It just gets re-directed into big fat bonuses, bigger dividends, more lavish parties, more limo rides, better golf trips. . . . . . . . Oh and reserch to make better cars?? No, no money for that

[mitchum]

21. Be a shame if something terrible happened at the stockholders meeting

a terrible shame...

[snowbear]

2. I wondered about that today too...

Pretty strange.. :(

[burrowowl]

3. Typical

of the laissez-faire neo-liberal capitalists. Even the so-called rich are loosing ground to the super 1%.
America! Wake up and smell the hydrogen sulfide!

[Robbien]

4. Goes to prove the idea that the economy is the stock market

GM will have a better bottom line to hand out to the ownership society elite and the cheerleaders will shout the economy is doing great. Anyone below the uber-rich doesn't matter in the equation.

[knowbody0]

5. you can bet the CEO's will get fat bonuses

it's hard work being cruel

[kentuck]

8. Yes, CEO's get big bonuses when they "save" money...

That should be worth a few extra million to the CEO, I would think?

[ncteechur]

6. Job cuts will not ultimately save GM from its dumbass self.

They will piss away whatever money they save because their management is shitty. Fuck GM.

[MazeRat7]

7. It has to due with reductions in OPEX and what the street thinks.

Obviously they believe that by reducing operational expenses the company will be more profitable. I don't know the GM details, but I know they are hemorrhaging badly.

Besides .50 on a 30+/share price is really nothing but a blip indicating that the street feels they are making a good move.

MZr7

[kentuck]

9. And their bonds are now classified as "junk"?

Why is that?

[MazeRat7]

13. Because of the risk that they may not be profitable again.

Like other bonds these are IOUs issued by companies. The difference being that these companies are perceived to carry a high risk of never repaying the money loaned to them. In order to persuade investors to accept this risk, the interest rates offered by junk bonds can be much higher than those offered by many other types of bonds.

[IChing]

10. If these 25,000 had a privatized social security account

they would have scored big in GM stock on the lost of their jobs.

I know that's Orwellian logic, see the system works.... shit.

[Old and In the Way]

12. It's not job loss anymore. It's "increased productivity"

Think how much the stock will be worth when the last poor bastard is building all the cars....

[RUMPLEMINTZ]

14. As a stock trader I'll give you my

perception. GM has something like 300,000 retired workers collecting pensions/health care. They don't even have that many employees so they are losing money hand over fist. Along with all those jobs they'll be closing a few plants too. One other thing they are doing is reducing the kinds of cars they make, I know one is that they are cancelling some of the SUV's.

GM's management does indeed suck, they caved in to the demands of the union years back and this is what they are stuck with. Now, not only will all those people lose their jobs but they will end up filing for bankruptsy and those retirees will be screwed. Don't get me wrong I'm not blaming the union, that's their job! Get the best deal they possibly can for the employees. It's the managements fault for thinking that it would not affect them long term.

[kentuck]

15. So will they declare their pension fund banrupt like United Airlines?

And the taxpayers will end up bailing them out? Putting more and more pressure on the limited funds for Social Security?

[RUMPLEMINTZ]

17. Yep, expect it either

later this year or next year. Wasn't it United that defaulted on their pension?

Edited to include link

Yep it was United

http://news.yahoo.com/news?tmpl=story&u=/latimests/20050511/ts_latimes/unitedairlinesclearedtoshedpensionplans

[kentuck]

18. Yes, corrected...

Thanks.

[RUMPLEMINTZ]

19. Oh Geez, now I cant read

I thought you said American Airlines. Must be getting late.

[OneTwentyoNine]

29. Its because they pissed away the profits when they owned the market...

Look back to the 50's and 60's--GM owned the automobile market in North America plain and simple. GM made so much damn money they could have literally burned it and still had billions.

Of course union workers wanted a bigger piece of the BILLIONS GM was raking in. Hell,they were the ones doing the heavy lifting,building the cars making the BILLIONS for GM and their stockholders. GM raised prices over and over and over.

Piss poor management is what this all comes down to,both in handling the finances of the company,thinking that foreign cars were all worthless junk,and never improving their own models until it was too late.

[spooky3]

32. GM's management is poor because they are out of touch with customers

When Japanese cars began selling well in the 70s, GM was smug and arrogant, rather than taking those cars apart and trying to compete with them. 30 years later they STILL haven't learned. That's why most of their vehicles get low ratings from Consumer Reports, and that why the sales of most of their cars have been declining for 30 years. Poor sales is the biggest cause of their current problems.

[gmoney]

16. Good excuse to eliminate those last few pesky US plants.

Too bad nobody took "Roger & Me" seriously when it came out, what, 15 years ago?

[benevolent dictator]

24. GM still has more plants here than

Toyota, Honda, and Nissan combined... They have something like 370 locations in approximately 40 states.

[gmoney]

26. Right, and that will be their argument...

"We can't be competitive if we keep our plants in the US... we must build our poorly designed oversized crapboxes in CHINA!"

"We can't be competitive if we have to honor our pension and health benefit obligations and keep using union labor... please big government, bail us out and let us bust up the unions."

Also, I'm sure the sheer number of GM plants contributes to their inefficiency. I live in a GM town with all kinds of hollowed out plants, employing a fraction of the numbers they once did.

[benevolent dictator]

34. I haven't seen the number for how many they're closing

but in your post you say both that GM is going to whine about how they have to move them to Mexico AND about how the number of plants they have makes them inefficient. Maybe they're just closing the plants? I haven't heard which plants are closing and if they're moving them overseas or not, if you have, please let me know.

Besides that, the Japanese car plants aren't unionized, and I have to wonder what will happen to their $26/hour wages once GM and Ford are gone...

[gmoney]

36. Well, I've heard the "attrition" line...

Some of the 25,000 layoffs (about 1/6 of their US labor force) will be in the form of "attrition" meaning the older workers who are at or near retirement age between now and 2008. I'm guessing that includes some early retirement options, etc. and that it applies to most plants across the board, and then other plants will be consolidated or closed.

Their UAW contracts actually prevent them from "closing" some plants, but they can downsize and play other games so the plant is officially open, but there's like one union guy in there painting the little white dot on the radio knobs or something. They're stuck paying a lot of these employees until the end of the union contract whether they work or not, but it may somehow work out cheaper to have those guys stay home and export the actual work to China.

Wonder about Worker's Comp costs, too... if you have a guy on the payroll who is NOT actually running the metal stamping machine he used to, they can probably take him off the Worker's Comp insurance rolls. Plus, they don't have to pay a union American worker to maintain the stamping machine, etc. etc. All sorts of overhead costs dry up when the plants are downsized or closed.

The far-flung scattering of plants strikes me as inefficient in that by the time a car is actually assembled and delivered, its parts and components have probably traveled across the country two or three times. Build some mega-plant in China where everything is produced in one spot (at near slave wages, with no environmental controls) and loaded on a boat, I'd guess the logistics and trasport costs come down quite a bit.

I'm not IN FAVOR of doing so, but I can see it making a perverse, sociopathic business sense. Industry keeps assuming that the service sector will absorb employees who are laid off and that those employees will be able to still fulfill the role of consumer while on some other company's payroll and continue to buy GM cars or whatever. But obviously that job market is NOT infinitely elastic, and damn few Applebee's employees earn what a 30-year GM union employee earns, and there are now going to be 25,000 fewer people who feel like buying a GM crapbox (even if the retirees still do, there won't be new people replacing them who will buy GM because of their employee discount).

I still think all this drama is largely a ploy to make it look like GM is in need of public bailouts and permission to bust their union contracts and offload their retiree obligations. GM has something like $20 BILLION in cash laying around, so they should be able to turn it around, even if it means buying out Hyundai or some company that's making vehicles that people want to buy.

[LSdemocrat]

20. Wall Street is stupid and short sighted

They only focus on short term gains regardless of the long term consequences. Oh, and don't bother trying to explain concepts that are broader than any one company or industry, stock brokers are way too obsessed in trying to divine nonexistent meanings from heavily manipulated press releases and financial disclosures to think about anything rational.

[gatorboy]

22. Here's an interesting link

http://biz.yahoo.com/ap/050607/job_cut_announcements_glance.html?.v=2

GM's Hourly Work Force Over the Years

A Look at GM's Hourly Work Force Over the Years

General Motors Corp. chairman and CEO Rick Wagoner said Tuesday that the company wants to close plants and cut 25,000 U.S. manufacturing jobs by 2008. Here are totals for GM's hourly work force in the United States over the years, according to the company's filings with the U.S. Securities and Exchange Commission:
--1991: 258,700

--1993: 235,240

--1997: 160,000

--1999: 148,000

--2001: 126,000

--2004: 111,000

[MrPrax]

25. Why complain now?

None of the 700 or so federally elected officials raised any alarm bells about it so why dump on shareholders... Don't Worry, Be Happy!!

<insert cute pix of a cat doing something ironically human>

[baldguy]

28. Corporations are America's parasites

Smart parasites don't kill their host.

[Serial Mom]

30. It's not even for the regular shareholder!

Public companies use the reason that they are trying to preserve the bottom line for the "shareholders".

It's all really for the board and officers of the company so they can cash in on the options, bonuses, etc.

Greed is good! :sarcasm:

[benevolent dictator]

35. Actually, legally their only obligation is to the shareholders...

That's why the CEO of Costco has had to go talk to HIS shareholders and explain why they pay good wages and benefits, because the shareholders think he should turn into Wal-Mart and he has to explain why that isn't as profitable to them. Luckily they haven't sued him yet, but they could.

[gmoney]

37. Corporations are a legal fiction and are out of control sociopaths

Watch the great documentary "The Corporation" just to see where they came from, how they've twisted the law to be outside the law, and how they're fucking up the world at a breakneck pace.

Yes, I know without "corporations" I wouldn't have a computer, or a TV set or whatever. The problem is this notion that their only obligation is maximizing profits for shareholders, even if it's to the detriment of society at large. Some accountability to the public and responsibility to the public good would make all the difference.

[benevolent dictator]

38. I'm not saying accountability to the public is a BAD thing...

...tell me how to get it in there along side their responsibility to their shareholders and I'll fight for it. I don't know how to go about getting other responsibilities into their charters, though.

[gmoney]

39. A little legislation?

A living minimum wage...

A maximum wage...

Revive the windfall profits tax on oil companies...

Outlaw predatory lending... realistic usury laws...

Nationalized insurance for homes, cars, health, etc... the insurance industry is robbery...

Reinstate the estate tax...

Price controls for pharmaceuticals and utilities...

Eliminate the phantom offshore holding company dodge (the one that allows for tax evasion and allowed Halliburton to sell to Iraq despite sanctions)...

Reinstate the "equal time" requirement on broadcast media...

Make it so companies can't just play the odds by breaking a law and possibly paying a fine that is less than the money they save by breaking the law...

Quit making the American Public subsidize Wal-Mart...

Universal health care so that losing your job isn't likely to kill you...

Proper funding of pension funds in a lockbox so businesses can't raid the funds then cry poor when it's time to pay...

Penalties for US corporations outsourcing jobs...

Enforce truth in advertising...

Make it so crimes against individuals are punished as severely as crimes against property...

Or how about changing the charters to acknowledge the debt any company owes to its community in the form of infrastructure, educated workforce, police and fire protection...
Perhaps the community is vested with stock, and ALL employees are vested with stock in their company and have a voice in decisions...

A little democracy and accountability... it's the difference between what's legal and what's right. Shits like Ken Lay and Dennis Kozlowski may not be proven guilty, but everyone knows what they did was wrong, wrong, wrong.

And yes, there are going to be "legal" ways to weasel around almost any legislation, but maybe the charter includes that the corporations will act within the intention of the law, not just the letter of the law.

Not everything I listed is part of a given company's charter, but most of what I listed was once regulated and/or could be regulated for the benefit of the public and in the name of fairness.

[benevolent dictator]

40. And I agree with you 100%. Now tell me how to do all that

and I'll be there. I don't know how to Nationalize health care, I tell people that's what we should have. It never seems to appear though.

I write to my senators about minimum and maximum wage laws, doesn't do a damn bit of good. None of it seems to. So tell me how to change that and I will, until then, we just have to deal with the way things are I guess.

[gmoney]

41. You're right. Give up. Go drink.

Funny how a lot of that has been UN-done since '94. But you're right. It's hopeless and pointless. I apologize for questioning the motives of America's beloved corporations, who after all, have NO CHOICE but to fuck over everyone. I guess I never looked at it from Ken Lay's point of view.

:sarcasm:

[benevolent dictator]

43. I didn't say it was pointless! I was seriously asking.

Tell me where to go. Is there someone already working on this? Are you part of a group that's working on this? I write to my senators, I explain to people WHY we need corporate repsonsibility and a living wage and a maximum wage and national health care. I don't know what else to do. I don't know who's working on it, if anyone at all. Tell me where to go, who to join, what to do, I'll be happy to oblige.

I organize an anti-Walmart group that educates people about why Wal-Mart is so bad and encourages people to boycott and let Wal-Mart know that they are and why they are. Hasn't really seemed to have too much effect, but I try my best. What do you do?

[spooky3]

31. Stock price almost always goes up a little after a layoff

announcement. But then it starts declining again.

[Spectral]

42. I just saw this happy horsecrap GM commercial today

Everybody gets the "employee discount" on their cars! Do they think we don't read the news?