General Motors is cutting 10,000 more jobs, paring the ranks of its white-collar workers. In addition, most of its remaining salaried workers will have their pay reduced beginning May 1. Could this be the shot in the arm that could move along bailout negotiations between the automaker, its labor unions and bondholders?
The latest job cuts are part of GM's efforts to submit a new restructuring plan required under the $13.4 billion U.S. government bailout. GM and other auto makers are struggling as folks stay out of showrooms and put off making car purchases. Research firm R.L. Polk & Co. expects U.S. light-vehicle sales to drop 19% this year, compared with a 17% drop in 2008.
GM and other auto makers have offered some incredible incentives to lure folks into showrooms to no avail. Yesterday I saw a full-page ad in my local newspaper offering 0% financing for 60 months on GM vehicles. But if most folks are like me, they're going to pass on such offers until they can get a better grip on what's going to happen to their jobs, homes, and the economy in general.
GM has been negotiating with its labor unions and bondholders to cut costs. The talks have been moving slowly and the United Auto Workers has been unwilling to accept more concessions on retiree health care costs. The UAW said it has made enough sacrifices and wants the other parties to make some concessions. Could GM's move to cut salaried workers put pressure on the UAW to say "Uncle"?