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GM Pinches Every Penny to Stay Alive

October 30, 2008

By Sharon Silke Carty

DETROIT — In its fight for survival on many fronts, General Motors is pushing to save every penny it can, even pressing plant workers to shut off lights, turn off air compressors and lower the heat.

The drive to pinch pennies came two weeks ago, says David Green, president of United Auto Workers Local 1714 in Lordstown, Ohio, when the plant there was told workers could no longer work overtime. Workers decided to cancel a bake sale they hold each year for the Toys For Tots program because GM wouldn’t let some line workers earn pay while working at the sale as it has done in the past.

“They’re in def-con mode, or at least that’s what it feels like,” Green says. “I started here in 1989, and I’ve never seen it like this. … Every little thing we can do, we’re doing. It’s really quite amazing.”

GM leaders appear to be doing everything they can, too, to ensure survival. CEO Rick Wagoner was in Japan discussing help from Toyota Motor, according to Kyodo News there, while executives back home continue to push for government aid and a deal to take over Chrysler.

Wagoner, who is working hard to assemble a GM-Chrysler merger in order to tap into Chrysler’s $11.7 billion in cash, would be CEO of the combined company, according to a source with direct knowledge of the talks who would not be named because the talks are private and remain sensitive and fluid.

GM on Wednesday reported global sales were down 11% in the third quarter, a sign U.S. troubles have spread to world markets that had been bright spots. Three of GM’s four regions saw declines.

“The reality of the situation is that the last quarter has seen unprecedented turmoil in the financial markets in many places around the world,” says Mike DiGiovanni, GM’s executive director of global markets and industry analysis. “Uncertainty definitely was the watchword to the third quarter.”

Green is waiting to hear whether GM’s new small car, the Chevrolet Cruze, will be made at Lordstown as planned in 2010 or be delayed. Automotive News reported Wednesday that the automaker is postponing nearly all product development spending in 2009 and 2010, which would affect the Cruze.

Joseph Phillippi, an analyst at Auto Trends Consulting, says the penny-pinching moves may not be a sign that GM is running out of cash.

“You could take it in the most dire of ways, but I think a lot of this is to instill into everyone, whether it be top management … down to the plant floor, the sense that we need to focus and watch all of our costs,” he says. “There are plenty of reasons to do that even when you’re making money. … You don’t need lights burning in the men’s room 24/7.”

Contributing: James R. Healey (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc. <>




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