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From the Detroit Free Press:

Engineers' work goes overseas, GM says

Next cuts in Mich. set for this month

April 6, 2006



General Motors Corp. will cut its engineering staff in Michigan for a second time later this month as it continues to shift some work to emerging markets such as Brazil, where GM is hiring engineers to develop the next-generation small pickup.

The job cuts, following last week's forced layoffs of hundreds of GM white-collar workers, will be the last round for the engineering department, and Michigan will continue to be home of GM's largest engineering center, a top GM official said Wednesday.

"North America is still huge. By far, it's our largest center, and it will continue to be our largest engineering center," Jim Queen, GM vice president of global engineering, told the Free Press.

"It's just that we're going through a difficult business period right now and it's getting right-sized."

Queen and a GM spokesman declined to say how many engineers, technicians and others would lose their jobs in the next round.

GM officials did not specify how many white-collar workers lost their jobs in last week's cuts, other than to say it was less than 500.

GM's engineering department employs 22,000 worldwide, with most clustered in 12 engineering centers.

Last week's U.S. job cuts were aimed primarily at GM's Tech Center campus in Warren, but they also affected about 30 other facilities in the United States. They follow one of the worst years in the automaker's history.

GM lost $10.6 billion in 2005 because of declining U.S. vehicle sales and rising costs, which spurred many analysts to conclude that the automaker could be forced into bankruptcy unless it turns the corner.

GM's U.S. sales have continued to falter this year.

On Wednesday, GM told workers at its Lordstown, Ohio, assembly plant that it will cut a third shift of workers sometime this summer because of forecasts of weaker sales of the Chevrolet Cobalt small car built there.

Production of the small cars will be cut to 1,000 a day from about 1,300 a day currently, spokesman Dan Flores said.

GM employs 6,000 workers at the Lordstown car assembly and metal-stamping plants.

An unknown number of workers will be affected by the downsizing because GM has offered all of its 113,000 U.S. hourly workers early retirement or buyout packages.

Therefore, the number of workers at plants like Lordstown is expected to fall, anyway.

Emerging markets

GM's cuts last week to its engineering staff stem not just from cost-cutting efforts, but from continued efforts to rely more on its far-flung engineering centers in emerging markets, where wages are lower. These centers have grown in recent years with the addition of GM Daewoo in Korea and new engineering expertise in China.

"There's significant emerging markets elsewhere in the world where we're going to be adding resources, and we're going to be adding to it this year," Queen said.

GM is close to announcing that it will codevelop the new pickup trucks in Brazil with Isuzu Motors Ltd., Queen said.

GM will again work with Isuzu despite disappointing sales for the current pickup, which was also codeveloped with Isuzu. In addition, GM confirmed last month that it is in talks to sell its 7.9% stake in the Japanese automaker.

Over the last six months, GM has sold its most of its stake in Japan's Suzuki Motor Corp. and all of its shares in the parent company of Japanese automaker Subaru.

But GM will continue to work with Suzuki and Isuzu to develop vehicles in an effort to cut costs, Queen said.

GM will add some engineers in Brazil for the small pickup truck program, Queen said.

Before that program starts, they will also work with Europe on developing the next-generation small- and midsize cars like the Chevrolet Cobalt, Saab 9-3 and Opel Astra.

Asia expands, too

GM also is adding jobs in India.

The automaker has posted want ads on its Web site for several jobs at its recently established research and development lab in Bangalore, India, including positions such as research engineers and senior statisticians.

GM also has notified professors at Wayne State University's College of Engineering, asking whether any Indian nationals earning a degree are interested in the positions.

India already does much of the design for automotive parts and components for many vehicles engineered elsewhere around the world, Queen said.

Despite growing engineering work in emerging markets, North America will remain the center for developing large pickups, SUVs, small crossovers and rear-wheel-drive luxury cars, Queen said.

By making one of GM's engineering centers responsible for a particular type of vehicle, the automaker can eliminate overlap and cut costs.

For example, GM used to develop five different types of midsize cars. But now, all the midsize cars share a similar set of components referred to as the Epsilon architecture.

That focus will allow GM to "do more with less," Queen said.

"That's exactly what we want and what we need to have if we're going to survive as a company."
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