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Record Profits at GM But Still Feelings of Mixed Success

Ace February 17, 2012 0

Typically when one hears the words “record earnings”, it tends to light up the mood. Not the case with General Motors and the American work force.

General Motors’ (GM) annual profits are showing great signs of improvement however all the profits have come at a cost.

In 2011, America’s largest automaker, GM earned $7.59 billion on $150.3 billion in sale, a 62% increase, just two years after taxpayer bailed out situation. The company sold 640,000 more cars and trucks in 2011 than it did in 2010.

Furthermore, Ford Motors and Chrysler Group who were once week competition also reported profits for the year. That’s the first time that Detroit’s Big Three showed signs of recovery. Sadly, the numbers game was not encouraging for workers at all.

To better explain this one has to consider what the numbers show on the assembly line. In 2011 Americans only bought about 12.8 million cars and trucks. The industry average is usually at around 16 million. Those two sentences alone show you the drastic comedown.

Watching companies build up revenue while the economy is still in a slump is always good news. GMhas won back its financial health mainly by closing plants and reducing wages. Americans can already see where the issue is. The company isn’t thriving as well as their workers had hoped.

The good news with the matter is that GM was finally able to build revenue, cut overhead and build incentives for consumers. The motor company made less profit per vehicle and lost market share due to Americans purchasing fewer trucks and large vehicles.

This is all great news for the company and its investors who saw GM stocks rise, but that’s not the case for the American work force. According to the Center for Automotive Research, more than a million jobs were saved by the United States auto industry bailout. However, this new business plan that GM is pushing has their number of employees dropping from 1.13 million people to about 500,000. The number is expected to rise if sales continue but due to the previous years bailout and burden on the economy GM will take slow steps towards it. Many jobs will still be left unanswered for.

Even more of a burden for the American work force are the jobs that do come back will have a less pay and carry fewer benefits. Today the new workers are being hired at $15.78 an hour which is about half of the rate of those hired under union agreements. Prior to the bailout autoworkers were cited as making wages as high as $50 – $75 an hour. This only opens up the sad truth that the auto industry is no longer a golden ticket to the middle-class way of life.

Sources:

http://www.businessweek.com/finance/record-profits-but-still-mixed-success-at-gm-02162012.html

http://online.wsj.com/article/SB10001424052970204880404577226822965273262.html

http://abcnews.go.com/blogs/business/2012/02/gm-posts-record-7-6-billion-profit/

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