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Friday, October 24, 2008

Not so Generous

While Chismillionaire is the first to say GM workers receive far more than they should in the way of benefits and guarantees compared to other automakers in the industry(Viagra prescriptions are paid for 100% for instance), but no 401(K) match is simply below the human standard that should be expected in our society. The very investments they should be making in future employees are going to go elsewhere. Very shortsighted for a company whose product mix is clearly starting to turn the corner with the Corvette, CTS, Malibu, G8, New Camaro, Escalade etc...

In the end Chismillionaire stands by this truth: It's all about the product!
Porsche has never been more profitable. Same for Audi, Ferrari, Lamborghini, Mini and BMW. Create products people clamor for and the money will ROLL IN to the point you will pay your employees $10,000 bonuses instead of paying them to go away and cutting their 401(k).

Looking to shore up its liquid assets during the economic slowdown, GM has explored unloading some businesses and brands, reducing advertising, refinancing its headquarters, and even taking over Chrysler in exchange for its stake in GMAC (although Motor Trend's Todd Lassa reports this is not happening for now). And now after months of plant closures and layoffs, it looks like the General's need for cash is claiming another victim -- employee 401(k) accounts.

While the automaker has already exceeded its original goal of eliminating 5000 salaried positions, recent turmoil on Wall Street and a plunging auto sales are forcing another round of belt tightening. According to a letter to executives from CEO Rick Wagoner and COO Fritz Henderson, the global credit crisis' "dramatic impact upon the industry at large" is driving GM to "address our increasing need to conserve cash." In part this means another round of white-collar job cuts, although spokesman Tom Wilkinson says that despite "very real short and mid-term challenges," the company will endeavor to "keep critical programs on track."

In addition to more job cuts, however, in a move that could affect all employees GM also plans to suspend company matching on employee 401(k) accounts, as well as cutting other benefits like college tuition assistance, dependant scholarships, and adoption-assistance. The 401(k) benefit suspension will go into effect November 1, the same date a new round of employees who've already taken early retirement will leave. With that in mind, in their letter Wagoner and Henderson point out these benefit cuts to workers still on the fence, saying "this may be an ideal time for them to exit the organization." Given that the next round of cuts might not include the courtesy of an early retirement offer, they could be right.

Source: The Detroit News