General Motors Layoffs

Since emerging from Chapter 11 bankruptcy in July, General Motors Co. has become somewhat of a poster child for how bankruptcy can turn around even the most seemingly doomed enterprise.  In the throes of the recession, General Motors’ future was questioned and its viability as a company uncertain. After filing Chapter 11 bankruptcy it was forced to make huge changes to the way it did business, severely curb employment and renegotiate contracts with both workers and vendors.  But since its emergence from Chapter 11 bankruptcy, General has invested $1.4 billion in more than a dozen plants and created about 5,500 new jobs.

The most recent move came Tuesday when GM announced it was recalling 1,200 laid-off hourly workers and adding a third shift of production at its Lordstown complex in Ohio. Workers there will help build the 2011 Chevrolet Cruze, which goes on sale in the third quarter.

GM may start hiring lower-paid union workers at Lordstown if the automaker is unable to fill the positions with the 5,000 to 6,000 laid-off union members nationwide, Tremblay said.

Under the terms of the United Auto Workers collective bargaining agreement reached in 2007, new hires receive $14 an hour and less-generous benefits.

The new payment agreement is significantly less than what union workers were earning at the time of General Motor’s bankruptcy filing.  One of the main problems with the automaker at the time of their bankruptcy filing was that they were sinking under the weight of expensive labor agreements and unprofitable contracts with vendors.  Bankruptcy allowed the company to reduce and/or eliminate those contract obligations giving it a fighting chance in the automaker marketplace.

Consult a bankruptcy lawyer today