15 February 2006
GM takes baby steps
Even though it suffered huge losses last year, General Motors Corp. is trying to keep the company moving forward by taking small steps.
Two steps are to produce the new Meriva model at its main Spanish plant in Zaragoza, despite lower costs in Poland, and to hire nearly 300 workers and invest $545 million in five Michigan plants.
"Today we announce that the next generation Meriva will be built here in our Zaragoza plant," said GM's Europe President Carl-Peter Forster.
The U.S. company said at one point they looked at producing the new Meriva at its Polish plant in Gliwice instead of in Zaragoza, where they make the existing model, but hourly labor costs are 3.5 times higher.
The current Meriva model accounts for 50% of the Zaragoza plant's output, while the smaller Corsa makes up the rest.
Unions feared 3,000 out of 7,400 jobs there would be at risk if production shifted to Poland and after months of negotiation agreed on measures to curb costs.
In November, workers accepted pay rises of only half the rate of inflation from 2008 and not to seek rises for other concepts such as seniority in a deal they hoped would increase the plant's chances of winning the work.
Meanwhile, closer to GM's headquarters, the company said it was going to invest $545 million in five plants and hire 300 workers. That news comes after GM said it would cut 30,000 jobs by 2008.
One plant where the company will invest $163 million is GM's Pontiac Assembly Center, which makes the Chevrolet Silverado and GMC Sierra pickups, a GM spokesman said.
GM plans to hire 280 people at the Pontiac plant. All of the "new" workers are either currently employed at GM plants or have been laid off from their GM jobs. GM has several thousand laid-off workers in a jobs bank. They get most of their pay and benefits even when they're not working.
The company said it is investing $152 million in its Ypsilanti transmission plant to increase production capacity for its rear-wheel-drive, six-speed transmissions. It is investing $60 million in its Romulus engine plant for making the small-block V8 engines that will go into its new full-size trucks. It is also spending $32 million to update the hydroforming equipment in its Pontiac metal stamping plant, which uses water to help make the unique curves on the Pontiac Solstice and Saturn Sky roadsters.
GM said it is investing $138 million to expand the body shop in its Lansing Grand River assembly plant, a state-of-the-art facility that will make the new Cadillac CTS. The sedan will go into production late this year or early next year.
GM lost $8.6 billion last year as it struggled with falling U.S. sales and increased costs for health care and materials. But the company has said it won't sacrifice product development, and its global capital spending was up $1 billion to $8 billion in 2005.
"Rest assured, we are working hard to return this company to profitability and long-term sustainable growth," said Joe Spielman, vice president and general manager of GM's North American manufacturing operations.
GM has targeted 12 facilities for closure by 2008, including four locations in Michigan that employ 4,751 hourly and salaried workers. GM and the United Auto Workers union must still negotiate the closures. The union contract expires in 2007.
For related information, go to www.isa.org/productivity.
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