General Motors to Cut 1,600 Jobs
General Motors asked the federal government to bail it out once again a couple of months ago. Thus far, the Obama administration has made clear that it will only help if GM promises to implement the necessary reforms to survive for years, rather than months. Although the big company seemed willing to play ball, unions and other interest groups prevent it from doing what is necessary.
Still, today brings good news for those of us who believe that GM should not be bailed out (at least not unless it takes responsibility for its own problems and does something about them):
General Motors Corp is cutting about 1,600 salaried jobs in the United States this week as it rushes to meet a June 1 deadline to restructure under U.S. government oversight, the automaker said on Monday.
The reductions are part of GM’s plan to slash its global salaried work force by about 10,000, or 14 percent, in a bid to cut costs. GM also aims to cut 37,000 hourly jobs worldwide by the end of the year.
If true, it is a good sign. GM has to cut thousands of jobs. There is no other option.
Additionally, its workers (and executives for that matter) will have to agree to a lower salary than they currently enjoy (I will not say “earn,” for you do not “earn” a high salary if you do not help your company make a profit) and General Motors will have to become a modern company. There is a reason it cannot compete against Asian automakers, several even. If it survives, it has to be because it is competitive, not because the federal government pumped many billions into GM in order to save it from itself.
Having said all that, even if GM would push through the necessary changes, it would not make it even slightly acceptable for the U.S. government to bail it out. Many people work for GM, true. But if the government is going to rescue every single business that employs a lot of people, there will be no end to the bailouts. Not now, not next year, not after that.
No, what matters is whether the entire economy will collapse if GM goes bankrupt. The correct answer is it will not. The U.S. economy can deal with the loss of GM, especially if its healthy parts are revived.
