Tags: GM to Add or Keep 4 | 000 Jobs in US

GM to Add or Keep 4,000 US Jobs, Spend $2 Billion on 17 Plants

Tuesday, 10 May 2011 02:34 PM

General Motors Co. said Tuesday it will invest about $2 billion in 17 U.S. plants, including a facility in Toledo, Ohio, that makes transmissions for small cars, as the automaker shifts from recovery mode to investing in future products.

GM said the plans will create or preserve more than 4,000 jobs as it retools the plants in eight states. The company employs 202,000 people globally, including 77,000 in the United States.

"We are doing this because we are confident about demand for our vehicles and the economy," GM Chief Executive Daniel Akerson said in a statement.

Investors and analysts have speculated on GM's plans for its growing pile of cash as the company's liquidity has reached $36.5 billion. It earned $3.2 billion in the first quarter after posting net income of $4.7 billion for all of last year, its first full-year profit since 2004.

GM did not disclose the timeline for the investments or in what other facilities it will invest other than to say more announcements will be made "over the next few months."

Executives previously signaled GM's focus on building cars would only grow, as shown by last week's announcement to invest $131 million revamping a Kentucky factory for a new version of the iconic Chevrolet Corvette sports car. The Kentucky announcement is part of the $2 billion plan.

Another key issue as GM adds jobs is how many will be in the so-called second-tier wages that are about half those of veteran union-represented employees. The lower wage will be a sticking point as major U.S. automakers face labor talks with the United Auto Workers this summer.

GM filed for bankruptcy in 2009 after the U.S. housing downturn and a spike in gasoline prices the year before that caused consumers to turn away from its high-profit but fuel-hungry trucks.

The U.S. automaker emerged from bankruptcy 40 days later thanks to a $52 billion taxpayer-funded bailout and sold shares in an initial public offering last November. Since exiting bankruptcy, GM said it has invested $3.4 billion in its U.S. plants, creating or retaining more than 9,000 jobs.

The investment is not a surprise and by delaying the details of the specific plants affected GM maximizes the attention it will receive as it works to assure taxpayers the bailout was money well-spent, said Mirko Mikelic, senior portfolio manager with Fifth Third Asset Management.

"They probably underinvested in some of these plants for the last few years," said Mikelic, whose firm has held GM bonds and preferred securities in the past and still follows the stock. "They were keeping a handle on their cash. For years, in terms of R&D, they've been behind particularly Toyota."

The U.S. government still owns 32 percent of GM's common shares and many investors see that as an overhang on the stock. Last month, sources said the Treasury could sell a significant portion of its GM shares by fall.

TOLEDO PLANT

In Toledo, GM will invest $204 million and retain about 250 jobs so the plant can make a new eight-speed automatic transmission toward the end of 2012. It employs more than 1,600 people, including more than 1,450 hourly workers.

The plant makes transmissions for a number of vehicles including GM's No. 2 selling Chevrolet Cruze small car. It also makes transmissions for trucks, which have not sold as well as high gasoline prices have pushed American consumers to more fuel-efficient vehicles.

GM, which employs 49,000 hourly U.S. employees, said any new hires will come in at the lower wage as agreed under its deal with the union. However, some of the positions will be filled with existing employees on the higher wage scale.

"The UAW's goal has been to return all laid-off workers to active status and see the company begin hiring again," said Joe Ashton, UAW vice president for GM relations.

The lower wage, introduced as part of concessions in labor talks with the automakers, has angered many rank and file UAW members. The top tier of UAW workers make about $28 per hour, enough to grant middle-class status.

The union has signaled it wants to share in the gains of the automakers, which are in a much better financial position than in 2007 when the last contract was signed.

The UAW has pointed to rising profits and a hefty $26.5 million compensation package for Ford Motor Co CEO Alan Mulally in 2010 as a sign of the automakers' reviving health and say they want a bigger share of profits going to rank-and-file workers.

GM shares were up 0.4 percent at $31.50 on Tuesday afternoon, compared with their IPO price last November of $33.

© 2017 Thomson/Reuters. All rights reserved.

 
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General Motors Co. said Tuesday it will invest about $2 billion in 17 U.S. plants, including a facility in Toledo, Ohio, that makes transmissions for small cars, as the automaker shifts from recovery mode to investing in future products. GM said the plans will create or...
GM to Add or Keep 4,000 Jobs in US
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Tuesday, 10 May 2011 02:34 PM
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