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GM-Chrysler deal to mean big job cuts
Closing of facilities also is expected
BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • October 29, 2008
Progress is being made in merger talks between GM and Chrysler owner Cerberus Capital Management, the Free Press was told Wednesday, but some issues remain. As reported earlier, financing of the deal is keeping it from occurring.
GM is pushing the federal government for some sort of assistance, including $10 billion in aid, while Cerberus is said to be continuing talks with another suitor, Renault-Nissan, about a potential deal, hoping to have some resolution within two to three weeks -- if not sooner.
It's believed Cerberus prefers a deal with GM, which could give the private equity firm a larger stake in GM's financing arm, GMAC. GM's stock surged Wednesday 8.2% on reports that GM and Cerberus had resolved some issues keeping them from a deal.
The U.S. Energy Department is working on temporary rules for the $25-billion loan program that could be completed as soon as next week. The Bush administration is considering setting up a $5-billion loan from that fund for GM.
In Michigan, up to 25,000 jobs could be cut because of a merger, including up to 10,000 hourly jobs and up to 15,000 white-collar jobs, said Patrick Anderson, chief executive officer of Anderson Economic Group. Outside Michigan, he estimated, up to 15,000 more factory jobs could be cut. He predicted 10 production facilities, including three in Michigan, would be closed.
"Michigan would be the most affected state in the country by far," he said. "We have by far the largest concentration of managerial and technical employment. An unavoidable effect of the merger is the combination of many managerial, technical functions between Chrysler and General Motors and that will mean the reduction in a good number of well-paid, professional jobs."
Analysts have predicted a merger would mean thousands of job cuts as GM rushes to eliminate duplicated functions. Other analysts have said the merger could mean 30,000 job cuts.
Gov. Jennifer Granholm and her office are preparing for a merger in case it occurs, aiming to have a rapid response ready to go if something occurs similar to what the state had for when Pfizer announced big job cuts in Ann Arbor. "We're looking at this from a SWAT team approach," Granholm spokeswoman Liz Boyd said. "We're looking at what can and what will we be able to do immediately to help people and communities, what will we be able to do in the short term and what will we be able to do in the long term."
GM sees the potential for cost savings in a merger with Chrysler and is eyeing the smaller automaker's supposed cash. While Chrysler has indicated losses of more than $1 billion during the first half of this year, the automaker has said it ended June with $11.7 billion in cash.
GM is burning through more than $1 billion in cash a month and analysts have predicted the company could run out sometime next year.
The two companies, independently, have been taking steps to save money and reduce spending. Chrysler, for example, announced last week it would eliminate about 5,000 white-collar jobs on top of the 29,000 it already has marked for elimination.
Contact TIM HIGGINS at 313-222-8784 or thiggins@freepress.com. Business writer Justin Hyde contributed to this report.
Thursday, November 13, 2008
Former Mexican president: Get over Michigan job losses
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Former Mexican president: Get over Michigan job losses
Ron French / The Detroit News
Vicente Fox, former president of Mexico, isn't a shy man. He calls President Bush the "cockiest" politician he's ever met; he talks glowingly of John McCain and less so of Barack Obama. And, he has a message for Michigan factory workers who have lost their jobs.
Get over it.
Those jobs aren't coming back, and Michigan should focus instead on the high-tech and service industries.
"In the end, Michigan factories have to compete with factories in Mexico and China," Fox said in a telephone interview Thursday. "Companies like General Motors and Ford and Maytag don't have an option. They either close the doors and fire their workers, or they move where they can gain economic competitiveness."
Fox, an outspoken critic of U.S. immigration policies and the person most identified with American jobs moving across the border, will speak at 6:30 p.m. Friday in the Community Arts Auditorium at Wayne State University.
Fox's speech and a question-and-answer session afterward are free and open to the public, but seating is limited. Tickets can be reserved by calling (313) 577-5550 or on-line at www.focis.wayne.edu.
The president of Mexico from 2000-2006, Fox has promoted a North American Union similar to that of the European Union, with a single currency.
Fox argues Americans helped create economic policies such as NAFTA that moved jobs to Mexico, and now are complaining about it, even though the United States continues to benefit.
"As long as you have salaries of $15 to $20 an hour, you will keep losing jobs to economies that pay $5 an hour," Fox said. "This great nation of the United States has to understand that the way we opened our markets, was to learn how to compete. Now that we have learned how to compete, the leaders of the United States is building walls. That's a big, big mistake. We should be building bridges, building opportunities.
"The loss of manufacturing jobs is a problem not only of Michigan but of the United States, and is a product of the new economy," Fox said. "(But) you cannot look at it from an individual perspective. That's the way General Motors, Ford and Chrysler were able to compete. That is good for the Michigan economy and also good for Mexico."
Fox's biography, "Revolution of Hope," offers a less-than-glowing impression of President George W. Bush. Fox and Bush, the former Governor of Texas, were close allies when the two men came into office in 2000, but relations turned frosty after Fox rebuffed Bush's request to support the U.S. invasion of Iraq.
Fox calls Bush a "windshield cowboy" and mocks his "grade-school Spanish."
The former president made it clear who he favors in the upcoming U.S. presidential election. Fox said his views are more in line with those of McCain, the Republican nominee. "What I see with McCain is experience," Fox said.
You can reach Ron French at (313) 222-2175 or rfrench@detnews.com.
Former Mexican president: Get over Michigan job losses
Ron French / The Detroit News
Vicente Fox, former president of Mexico, isn't a shy man. He calls President Bush the "cockiest" politician he's ever met; he talks glowingly of John McCain and less so of Barack Obama. And, he has a message for Michigan factory workers who have lost their jobs.
Get over it.
Those jobs aren't coming back, and Michigan should focus instead on the high-tech and service industries.
"In the end, Michigan factories have to compete with factories in Mexico and China," Fox said in a telephone interview Thursday. "Companies like General Motors and Ford and Maytag don't have an option. They either close the doors and fire their workers, or they move where they can gain economic competitiveness."
Fox, an outspoken critic of U.S. immigration policies and the person most identified with American jobs moving across the border, will speak at 6:30 p.m. Friday in the Community Arts Auditorium at Wayne State University.
Fox's speech and a question-and-answer session afterward are free and open to the public, but seating is limited. Tickets can be reserved by calling (313) 577-5550 or on-line at www.focis.wayne.edu.
The president of Mexico from 2000-2006, Fox has promoted a North American Union similar to that of the European Union, with a single currency.
Fox argues Americans helped create economic policies such as NAFTA that moved jobs to Mexico, and now are complaining about it, even though the United States continues to benefit.
"As long as you have salaries of $15 to $20 an hour, you will keep losing jobs to economies that pay $5 an hour," Fox said. "This great nation of the United States has to understand that the way we opened our markets, was to learn how to compete. Now that we have learned how to compete, the leaders of the United States is building walls. That's a big, big mistake. We should be building bridges, building opportunities.
"The loss of manufacturing jobs is a problem not only of Michigan but of the United States, and is a product of the new economy," Fox said. "(But) you cannot look at it from an individual perspective. That's the way General Motors, Ford and Chrysler were able to compete. That is good for the Michigan economy and also good for Mexico."
Fox's biography, "Revolution of Hope," offers a less-than-glowing impression of President George W. Bush. Fox and Bush, the former Governor of Texas, were close allies when the two men came into office in 2000, but relations turned frosty after Fox rebuffed Bush's request to support the U.S. invasion of Iraq.
Fox calls Bush a "windshield cowboy" and mocks his "grade-school Spanish."
The former president made it clear who he favors in the upcoming U.S. presidential election. Fox said his views are more in line with those of McCain, the Republican nominee. "What I see with McCain is experience," Fox said.
You can reach Ron French at (313) 222-2175 or rfrench@detnews.com.
Michigan's job-loss streak is the longest since Great Depression
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ANN ARBOR, Mich.—Michigan has endured six straight years of job losses and the next two years will see even more—the longest stretch of employment loss in the state since the Great Depression, say University of Michigan economists.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs and it will lose another 33,000 jobs in the next two years, they say. Most of these losses are in manufacturing.
Moreover, unemployment in Michigan is projected to rise from an average of 6.8 percent this year to 7.5 percent next year and 7.7 percent in 2008—the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton. "With Big Three market share continuing to decline for 2007 and 2008, auto industry downsizing will not have run its course by mid-2007.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory."
In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict the state will lose 24,000 jobs during 2007 and another 9,000 during 2008—due to heavy job losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they say. The auto industry will account for about 70 percent of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but in particular, the well-being of the traditional domestic producers, or Big Three—General Motors, Ford and the Chrysler Group," Crary said. "From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
Despite the continued bleak outlook for manufacturing employment, Michigan's economy will add jobs in other sectors—namely, in services, the forecast shows. After adding more than 20,000 jobs this year, service industries will gain nearly 13,000 jobs during 2007 and just under 17,000 during 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy. About 40 percent of the additions will come from professional and business services and from leisure and hospitality services over the next two years.
In all, the U-M economists say that in any analysis of Michigan's economic prospects, the "elephant in the room" clearly is the well-being of the Big Three automakers.
"The risks associated with the auto industry remind us of how vulnerable the Michigan economy is to the uncertainties that lately seem to define the domestic companies," Fulton said. "These troubled times in Michigan stress how critical it is for these companies to get their houses in order.
"More to the point, though, these troubled times scream out for a strategy of investing in other activities, activities that show promise in the new economy. The issue is being discussed frequently these days in Michigan, and a fairly compelling argument has been made for investing in a more highly skilled work force and growing the knowledge-based economy. Such a strategy would be in step with the evolving new economy, recognizing that regardless of the fate of the domestic auto industry, we are not going back to the good old days."
ANN ARBOR, Mich.—Michigan has endured six straight years of job losses and the next two years will see even more—the longest stretch of employment loss in the state since the Great Depression, say University of Michigan economists.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs and it will lose another 33,000 jobs in the next two years, they say. Most of these losses are in manufacturing.
Moreover, unemployment in Michigan is projected to rise from an average of 6.8 percent this year to 7.5 percent next year and 7.7 percent in 2008—the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton. "With Big Three market share continuing to decline for 2007 and 2008, auto industry downsizing will not have run its course by mid-2007.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory."
In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict the state will lose 24,000 jobs during 2007 and another 9,000 during 2008—due to heavy job losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they say. The auto industry will account for about 70 percent of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but in particular, the well-being of the traditional domestic producers, or Big Three—General Motors, Ford and the Chrysler Group," Crary said. "From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
Despite the continued bleak outlook for manufacturing employment, Michigan's economy will add jobs in other sectors—namely, in services, the forecast shows. After adding more than 20,000 jobs this year, service industries will gain nearly 13,000 jobs during 2007 and just under 17,000 during 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy. About 40 percent of the additions will come from professional and business services and from leisure and hospitality services over the next two years.
In all, the U-M economists say that in any analysis of Michigan's economic prospects, the "elephant in the room" clearly is the well-being of the Big Three automakers.
"The risks associated with the auto industry remind us of how vulnerable the Michigan economy is to the uncertainties that lately seem to define the domestic companies," Fulton said. "These troubled times in Michigan stress how critical it is for these companies to get their houses in order.
"More to the point, though, these troubled times scream out for a strategy of investing in other activities, activities that show promise in the new economy. The issue is being discussed frequently these days in Michigan, and a fairly compelling argument has been made for investing in a more highly skilled work force and growing the knowledge-based economy. Such a strategy would be in step with the evolving new economy, recognizing that regardless of the fate of the domestic auto industry, we are not going back to the good old days."
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