Unlike many of its competitors, GM’s manufacturing costs are astronomical, much of these costs are tied up in the cost for labor. For years General Motors has tried new strategies to reduce the cost of labor, but the UAW has consistently resisted such moves and in so doing they have crippled a once vibrant and dominant US company.
These high costs have left GM (and Ford) weakened. They must charge more for their products to recoup these high costs, but in so doing they price themselves right out of the market. If GM lowers its prices to remain competitive, then they loose money, given the high production costs embedded in each vehicle sold. UAW workers have resisted moves towards increased productivity and increased automation, strategies long employed of Asia and European rivals. Indeed, using non-unionized American employees, Hyundai, Toyota, Honda, etc…produce thousands of vehicles for far less than their American counterparts.
Given the fact that GM has been unable to convince the unions of the need for greater efficiency, the firm as been reduced to simply dismissing employees as a means of lowering costs, a financial strategy which has a poor track record to say the least. Now GM is offering to “buyout” its employees. The firm is offering early retirement, to nearly 100,000 GM workers. General Motors and its Delphi subsidiary are offering to pay workers up to $140,000 to quit or take early retirement. The announcement has struck a sour note with many employees who have called on the Union to fight, arguing the move is a slap in the face and robs employees of their “future.”
What these workers fail to understand is: if they continue to drag down the company with their union inspired intimidation tactics, there will be no company left to fight. In reality GM needs to do more than simply shrink its job force, the firm must shrink its unionized job force. As along as the UAW dictates the terms of employment for autoworkers in America, the US auto industry will remain crippled, leading to eventual extinction.
http://www.latimes.com/news/nationworld/nation/la-na-workers23mar23,0,7977327.story?coll=la-home-headlines
