UAW labor union says GM job cuts 'unfair'

The United Auto Workers said on Monday that General Motors Corp.’s decision to cut 30,000 jobs and close or curtail operations in at least 12 plants was “extremely disappointing, unfair and unfortunate.”

“Today’s action ... is devastating to many thousands of workers, their families and their communities. While GM’s continuing decline in market share is not the fault of workers or our communities, it is these groups that will suffer because of the actions announced today,” UAW President Ron Gettelfinger and Vice President Richard Shoemaker, who directs the UAW’s General Motors department, said in a release.

The plan, which affects at least a dozen plants in the United States and Canada, would allow the company to achieve $7 billion in cost reductions by the end of 2006 -- $1 billion above its previous target and represents 5,000 more job cuts than the auto maker had previously indicated.

Economic impact slight
Economists meanwhile said the GM job cuts will shake consumer confidence and ripple through the auto parts industry, but the impact on the economy as a whole will be slight.

“Everyone understands the old adage that “What’s good for GM is good for the U.S. economy,’ and if GM, the bellwether, is struggling, it very clearly affects confidence,” said Michael Gregory, senior economist at BMO Nesbitt Burns.

“From a manufacturing standpoint, it’s going to have ripple effects into the parts industry as well -- adding to the headwind on the manufacturing side,” he added.

But while the bad news from Detroit will likely cripple communities where plants are slated to close in 2006 -- from Lansing, Michigan, to Oklahoma City and Spring Hill, Tennessee, -- planned expansion elsewhere by foreign automakers will mitigate some of the national impact.

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“Unlike in the past, we see that many of the foreign transplants in the United States take up the slack and hire U.S. workers,” said Anthony Chan, senior economist at JPMorgan Asset Management. “So you get some sort of an offset that you wouldn’t have had 20 or 30 years ago.”

Analysts said they do not expect the job cuts to have much short-term impact on U.S. employment or on gross domestic product, since the layoffs will take months or even years to complete under United Auto Worker labor agreements.

The U.S. job market is also relatively well-positioned to absorb the cuts. While employment was shaken in recent months by the Gulf Coast hurricanes, nearly 4 million jobs have been created in the last two years, and economists have forecast job growth will continue at about 200,000 jobs a month in 2006.

Still, the headlines created by the layoff announcement build on a raft of bad news from old stalwarts of the U.S. economy that are struggling to fund huge pension and benefit programs not offered by many newer, sleeker competitors.

The sense that the best, safest and most generous jobs are a thing of the past may resonate with consumers.