The auto industry as the banking industry have made bad choices by management. The auto industry was not forward thinking enough, never thought gas prices would climb so quickly and invested heavily in SUVs. The banking industry risked their shirts in the mortgage market and got burned for their greed.
Now we see GM eliminating the Pontiac brand, for good. Along with eliminating Pontiac will be slashes in dealerships and more jobs to the tune of 21,000.
The job loss continues to climb.
General Motors Corp. announced plans to phase out its Pontiac brand and cut 21,000 U.S. factory jobs by next year -- as part of a major restructuring effort needed to get billions more in government aid.
In total, GM is cutting more than 7,000 additional jobs than what it announced on Feb. 17, 500 additional dealers and closing another plant -- or 16 of its 47 U.S. manufacturing plants by 2012 -- and 13 of those plants by the end of the next year; GM hasn't named any of those plants yet.
GM launched its bond exchange offer this morning to its holders of $28 billion in unsecured debt, offering them 10 percent of the equity in the company and accrued interest -- in an effort to avoid a bankruptcy filing before the end of May.
GM said it plans to sell or close Hummer, Saab and Saturn brands by the end of this year -- faster than an earlier schedule.
"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, GM president and CEO. "Our responsibility is clear - to secure GM's future - and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."
GM said it would cut its hourly employment by 21,000 to 40,000 in 2010 -- a 34 percent reduction, and level off at about 38,000 starting in 2011. GM plans a further decline in salaried and executive employment -- for 7,000 to 8,000 additional job cuts than what was announced in GM's Feb. 17 viability plan.
For middle class workers in the auto industry this is devastating news, but if the industry is to survive it is necessary.
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