Ford, GM Job Cuts Approach 50 Percent; Chrysler Close Behind

When you add up all the cuts, Chrysler, Ford and GM are well on their way to cutting half their employees in North America in just over five years.

That’s staggering, especially since most of those cuts have taken place in just the last two years.
 
GM announced the latest cut on Feb. 10. GM said it will cut 10,000 white-collar jobs worldwide in 2009, including about 3,400 in the United States. In November, GM said in its application for a federal bailout that it had already cut U.S. employment from 177,000 in 2002 to 93,000. Cutting another 3,400 jobs means GM will have cut 49 percent of its work force since 2002.

GM also cut pay for most salaried employees in the United States, effective May 1. Executive-level employees will have their base pay reduced by 10 percent; middle managers, by 3 to 7 percent. Chrysler and Ford are in the same boat, although Ford so far is able to brag that it has not pursued government loans.

Chrysler said in late 2008 it had 56,600 employees, after reductions of about 32,000 since 2007. At the end of 2004, the company had 84,375 employees, so it has already shrunk about 33 percent. Look for even more cuts to come.

In a speech last month sponsored by J.D. Power and Associates, Chrysler Vice Chairman and President Jim Press said that in 2007, following its breakup with Daimler, Chrysler had the task of shrinking a company that had been built up over the years to produce around 4 million units a year, into a company that could be profitable at a more realistic 2 million units a year, “which it should have been all along.”

Then the bottom fell out of auto sales and the U.S. economy in the second half of 2008, Press said. The company realized it had to shrink its breakeven point even more. “This year, we’re going to make it the 1.7-million-a-year company it should be,” he said. A proposed Chrysler merger with Fiat is another key to the company’s strategy.

Meanwhile Ford has shrunk its North American work force by about 44 percent in about three years, to about 65,000.

To keep the government loans they have already received, and to get more money, Chrysler and GM are due to submit business plans next week, demonstrating “long-term viability.” Barring a miracle, it’s shocking to see just how small they’re getting, to reach a point where they can make a sustainable profit.