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Archive for December, 2008

GM Plans to Idle 20 Plants, 6 in MI

DETROIT — General Motors Corp., awaiting word on whether the auto industry will get emergency federal aid to stay afloat, will temporarily idle 20 plants across North America and slash production early next year to adjust to plummeting vehicle sales.

The temporary closures are unprecedented in scope. When combined with moves announced a week ago the closures mean GM will build 250,000 fewer vehicles than usual during the first quarter of 2009, company spokesman Chris Lee said. Normal production volume during the first quarter would be about 750,000 vehicles.

The plants affected in Michigan include facilities in Detroit-Hamtramck, Flint, Pontiac, Orion Township and two plants in Lansing.

Republicans to U.A.W.-It’s Payback Time

A federal bailout for Detroit’s automakers appears close to dead, delivering a crushing blow to a Michigan economy reeling from high unemployment, skyrocketing home foreclosures and sagging tax revenue.

The obstructionists: Southern Republicans determined to use a financial crisis to rework corporate balance sheets and rewrite collective bargaining agreements on their terms and timetables.

Paybacks can be hell when business meets politics, as union leaders, their members and tens of thousands of folks associated with the Detroit-based auto industry are seeing clearly in the wrangling to craft an emergency bill to throw lifelines to beleaguered General Motors Corp. and Chrysler LLC.

Stripped bare and put in the regional context of union vs. nonunion and domestic vs. foreign, the toughened conditions pushed by Sen. Bob Corker, R-Tenn., are legislative cruise missiles aimed directly at Detroit’s business model, the UAW’s Solidarity House and 70 years of Big Three bargaining tradition.

How could they be anything else? Immediately match the pay and benefits of foreign-owned automakers operating in the South, his terms say. Reduce your expectations for Big Three contributions to the barely funded retiree health care fund and take some in stock. Eliminate the Jobs Bank and supplemental unemployment benefits.

And if UAW and company bargainers can’t get there by a March deadline — along with concessions from bondholders, management, shareholders and suppliers — GM and Chrysler must seek federal bankruptcy protection like almost every other private-sector player would under similar circumstances.

Jobless Claims Soar to 26 Year High

Dec. 11 (Bloomberg) — The number of Americans filing first- time claims for unemployment benefits surged more than forecast last week to a 26-year high, a sign companies are stepping up firings as the recession deepens.

Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982, from a revised 515,000 the previous week, the Labor Department said today in Washington. The number of workers staying on benefit rolls reached 4.429 million, also the most since 1982.

Employers are slashing payrolls as consumers retrench and credit stays frozen. Mounting job losses and falling home prices increase the likelihood that the U.S. recession will extend well into 2009, adding impetus to President-elect Barack Obama’s call for an economic stimulus package of unprecedented size.

“The labor market is facing its worst crisis since 1982, and it is certainly not over yet,” Harm Bandholz, a U.S. economist at UniCredit Markets and Investment Banking in New York, said before the report.

“One of the most important tasks of the newly elected government is, therefore, to help distressed homeowners and to stimulate the labor market.”

Chicago Workers End Factory Sit In

CHICAGO, Illinois (CNN) — Laid-off workers at a Chicago window factory ended a five-day sit-in after banks agreed to lend the failed company $1.75 million for outstanding wages and benefits, union officials said Wednesday.

Protesters demonstrate in support of the window-factory workers in Chicago on Wednesday.

“The occupation is over,” said Armando Robles, president of the United Electrical Workers local 1110, which led the sit-in.

About 200 workers launched what they called a “peaceful occupation” of the Republic Windows and Doors factory Friday after Republic gave its employees three days notice of the layoffs. According to the workers, Republic told them that Bank of America had cut off credit to the company.

Federal law requires 60 days notice or 60 days paid compensation for workers when they close plants.

Bank of America agreed Wednesday to approve $1.35 million in loans to pay those obligations. Another $400,000 came from J.P. Morgan Chase, union officials said.

Workers approved the deal at a meeting Wednesday night. Union official Carl Rosen said the average worker will receive about $6,000 under the package.

But he added: “This is about more than just money. It’s about what can be achieved when workers organize and stand up for justice.”

Detroit Automaker Bailout Getting Closer

WASHINGTON — The White House and congressional Democrats reached an agreement in principle late Tuesday on a $15 billion bailout to keep General Motors Corp. and Chrysler LLC afloat through early next year, but supporters still must get enough Senate Republicans on board to pass a bill.

The White House won a key concession that would essentially force the automakers to file for bankruptcy if they have not worked out long-term restructuring plans by March 31. The presidential appointee who would oversee the money, or “car czar,” would be required to call back the loans at the end of that period if he or she determines a company is not executing a plan for viability, a senior Bush administration official said.

The czar could grant automakers a one-time, one-month extension, to April 30, if they were making significant progress.

In exchange for aid, automakers would have to accept conditions. They would be barred from paying bonuses to top executives and dividends to shareholders, and could not own or lease corporate aircraft.

November Job Losses Worst in 34 Years

NEW YORK (CNNMoney.com) — The economy shed 533,000 jobs in November, according to a government report Friday – bringing the year’s total job losses to 1.9 million.

November had the largest monthly job loss total since December 1974.

“No one expected such a drastic number,” said Tig Gilliam, chief executive of placement agency Adecco. “This is a real wake-up number.”

Michigan Will Lose at Least 90,000 Jobs in 09 Maybe More

Michigan will lose 225,000 jobs – 5 percent of its total payroll – next year if two of the Detroit automakers file for bankruptcy, Comerica Bank’s chief economist warned in his latest report on the state’s economy.

Even if the auto companies succeed in winning loans from the federal government, Dana Johnson estimates that Michigan will still lose about 90,000 jobs, or a little more than 2 percent of its payroll, with 30,000 of the lost positions related directly to the auto industry.

Johnson expects Michigan to undergo its sixth consecutive year of recession in 2009 because of the continued restructuring efforts at the Detroit Three automakers.

“The endurance of the citizens of the state is going to be sorely tested,” he wrote in his report. “But as the above numbers on potential job loss so clearly indicate, it will be a far more daunting test if the Detroit Three fail to win a government rescue package.”