All The Bad Stuff Happening At GM Right Now
GM is in the news as a result of the coronavirus and just like the virus none of it is good. Even the President of the United States is saying not-so-good things about GM in some of his infamous tweets. Here’s all of the bad stuff happening at GM right now:
White-collar salaries are cut by 20%
GM cut salaries to its white-collar workers by 20%. This is an effort to conserve cash with no cars being sold other than in China. Both CEO Mary Barra and CFO Dhivya Suryadevara said in a webcast to employees that this is necessary in order to cut costs. Suryadevara said they would go as far as running the company on credit if necessary. The cuts will begin on April 1 and could be in place for up to six months.
Suspending progress on some projects
In an email to employees, CEO Mary Barra said GM is “aggressively taking costs out of the business wherever we can by suspending work on some product programs and cutting our marketing budgets and hundreds more actions.” It won’t be delaying development on the Cadillac EV SUV or the Cruise Origin. This is a self-driving car GM is deep into development on.
6,500 salaried employees temporarily laid off
In desperate attempts to reduce costs, 6,500 salaried employees will be placed on leave. They will all receive 75% of their pay during the time they don’t work. This mainly affects engineering and manufacturing-which cannot work remotely. No timeframe was given for when they might return.
Trump upset about the cost of ventilators GM is scrambling to make
GM just partnered with Ventec Life Systems to ramp up ventilator production in the wake of an urgent need for them. This was the first step in its commitment to help fight the coronavirus through its ability to make products on a massive scale. But now the Trump administration is questioning the cost.
The Federal Emergency Management Agency has jumped in to review the cost. GM says it will cost $1.5 billion to retool an electronics plant in Kokomo, Indiana, to begin production. Having more ventilators is urgent as more coronavirus victims land in hospitals. But now the government has told GM to wait while it looks at a dozen other proposals.
Now Trump is tweeting criticisms of both GM and Barra. He writes, “As usual with this General Motors things just never seem to work out. They said they were going to give us 40,000 much-needed ventilators ‘very quickly.’ Now they are saying it will only be 6,000 in late April and they want top dollar. Always a mess with Mary B. Invoke ‘P.’
Trump is threatening to invoke the Defense Production Act
The “invoke P” is in reference to invoking the Defense Production Act. This forces factories to build what the government needs. At this stage, it’s unclear whether Trump will do that. GM has said it is ready to begin production of ventilators but has to wait for regulatory approval. That could happen today.
But this wasn’t all the wrath GM would need to endure. Later Trump tweeted the GM “MUST immediately open their stupidly abandoned Lordstown plant in Ohio, or some other plant, and START MAKING VENTILATORS NOW!!!!!!!” Wow.
It’s a shame that the negotiations need to be played out in public. We assume this is a tactic that has worked for the administration in the past. Nonetheless, the sniping would be better left out of the equation.
UPDATE: A few hours after this was written, President Trump signed an order requiring GM to produce ventilators under the Defense Production Act.