For 'leaner GM,' which workers are the fat?
The impact will spread beyond the industrial Midwest to employees in states like Florida, Delaware, and Virginia.
GM announced a dozen locations where it will close facilities as part of its bankruptcy-based restructuring.
The goal of Monday's bankruptcy filing is to create a leaner "new GM" that can survive and be profitable.
But in the process, an "old GM" is disappearing, with impacts spread through the industrial Midwest and beyond.
The company had 92,000 total workers in the US last year, including hourly and salaried employees. After restructuring, the firm will have about 63,000, chief executive Fritz Henderson said Monday. The company also wants to cut the number of GM retail dealerships from more than 6,000 down to 3,600.
President Obama, who announced $30 billion in federal aid for the firm, referred to the sacrifice – and its meaning.
"Building a leaner GM will come at a cost," Mr. Obama said. But the goal of a restructured GM is that "our children can grow up in an America that still makes things."
He said his administration is working on several fronts to help communities – both those facing big layoffs and those where factories aren't as busy as normal. Obama has appointed Ed Montgomery as director of recovery for auto communities. The president also said he is accelerating the federal car purchases, to "give the industry a boost at a time when it needs one."
Obama also supports "cash for clunkers" legislation in Congress, which would provide a tax credit for consumers who turn in old cars and purchase cleaner, more fuel-efficient cars.
The affected communities that GM identified Monday are:
-Orion, Mich. (assembly plant to go on standby)
-Spring Hill, Tenn. (assembly plant to go on standby)
-Pontiac, Mich. (assembly plant to close)
-Wilmington, Del. (assembly plant to close)
-Pontiac, Mich. (stamping facility to go on standby)
-Livonia, Mich. (powertrain facility to close)
-Flint, Mich. (powertrain facility to close)
-Willow Run, Mich. (powertrain facility to close)
-Parma, Ohio (powertrain facility to close)
-Fredericksburg, Va. (powertrain facility to close)
The four assembly plants affected will all close this year (with two of them on standby, meaning workers could be recalled if GM needs to boost production). The stamping and powertrain sites will close next year or, in the case of Indianapolis, in 2011.
Every automotive layoff could mean additional job losses in the surrounding communities. In general, GM estimates that each of its manufacturing jobs indirectly supports two jobs "upstream" in the parts industry and another 10 jobs "downstream" in dealerships and elsewhere in the economy.
Overall, the company estimates that the automaking industry provides 334,000 jobs directly, and supports 4.4 million jobs indirectly.
That goes a long way toward explaining why the Bush and Obama administrations have wanted to provide aid for a carefully managed downsizing by both GM and Chrysler, rather than letting them fall into a disorderly bankruptcy proceeding. Although the ongoing job cuts are hard on the economy, they almost certainly would have been worse without government involvement.
Obama stressed this point in reference to Chrysler, which entered bankruptcy ahead of GM.
"Tens of thousands of jobs that would have been lost if Chrysler had liquidated will now be saved," he said. "Just 31 days after Chrysler's Chapter 11 bankruptcy filing, a court has approved the Chrysler-Fiat alliance," he said, "paving the way for a new Chrysler to emerge from bankruptcy in the next few days."