Houston Cars

I wonder how it would feel to be the man in charge of a company that posted a $38.7 Billion loss for the year Two Thousand and Seven.  If I really wanted to know, I’d just ask my good buddy Rick Wagoner, the CEO of GM.  Just to clarify, the B in billion was not a typo, and I did not mean M for Million.  GM posted a loss of $38.7 Billion in 2007 - a record for any automaker, ever.  It shattered GM’s previous record, a $23.2 billion loss way back in 1992. 

With regards to the record setting year, $38.3 billion of the loss was due to a “special charge” that basically represents previous losses that weren’t accounted for until 2007.  I’m not a tax expert, so I won’t even pretend I understand that.  The bottom line is that GM is trying to play it off like it’s no big deal, but $38+ Billion is a whole lotta money, no matter how you slice it.

Work for GM?  How about a buyout?

Every single one of GM’s UAW employees will be offered a sweet buyout package.  The buyout ranges from $45,000 and benefits all the way up to $140,000 for the younger folks.  The idea is to replace the older workers who earn a whopping $78.31 per hour ( wages & benefits combined ) with younger workers who will make just $25.65 total per hour.  That’s basically cutting their payroll expenses by 67% for each worker than can replace.  Not a bad deal.

My concern is this - what happens if every single employee takes the buyout and runs for the hills?  Who will build the cars?  Who will train the new workers?  Sure, everyone bailing out is unlikely, but not unfeasible. It would be funny, if nothing else.  Perhaps then GM would pay the same workers to stay