According to the Wall Street Journal, General Motors offered a buy out package for their union workers and 19,000 employees accepted the offer. This is a huge number of cuts for any manufacturer, even the General. In one move, GM shed about 24% of their hourly labor force.

Mr. Stoll of the Wall Street Journal surmises that this move was timed to fall just ahead of the annual shareholders meeting next week. He’s likely right. These deep cuts are necessary because the bread-and-butter “large vehicle” segment (trucks and SUVs) are selling slowly and GM has to stop bleeding cash in the midst of a 12% year-on-year reduction in sales. Can’t have that showcased without a solution in hand with those nasty owners staring you in the face. Especially when the stock price is lower than it’s been in more than 25 years.

An analyst quoted in this Reuters piece about the cuts opines:

“These restructuring plans look aggressive when they’re announced, but it turns out that they’re not aggressive enough,” Argus Research analyst Kevin Tynan said. “The market is moving much faster than these restructuring plans are.”

I may be inclined to agree, except that I would add that a company can’t simply cut its way to market success, they must work their way out of it, too. In that light, I think that new products such as the 9x/9-1 and the Saab plug-in hybrid can’t come soon enough. I hope that GM understands that and is getting those vehicles in the pipeline quickly.

According to these and other articles, it appears that GM is also likely to announce at the shareholders meeting that one or more plants will be idled, and that some products will be discontinued.

Let’s also hope that Ron Gettlefinger and crew don’t inflate compensation again once GM, Ford and/or Chrysler get their ship(s) righted. The hourly earners that were targeted with this round of cuts make US$78 per hour in total compensation. Without overtime, that’s US$156,000 per year, but if you talk to any UAW laborer with any tenure they will tell you that they consider anything less than eight hours of overtime in a week a reduction in baseline salary. That puts the number closer to US$200,000 per year in total compensation. Even if “total compensation” includes health, retirement and insurance benefits, these workers are still making US$90,000 to US$100,000 per year base salary and about US$130,000 or so with overtime. Absurd.