Globalization: GM to cut 30,000 jobs by 08'

An increase competition from Asian (mostly Japan) auto makers reduced GM's market share and cause it to loose $4.8Billion so far. Meanwhile the sales continue to drop and rumors says that the company might bankrupt. Today GM announced on a plan to cut 30,000 jobs by the end of 08', a higher number than the early expected 25,000 as reported on June this year. Most of the job cuts will be based on retirement plans and the company plans to reduce its production capacity by 1 Millions from 6 Millions vehicles today.

GM find it difficult to continue the competition with Asian auto makers. The company confronts with high health-care expenses that can not be reduced without negotiation with the United Auto Workers union. The company also intended to purchase a larger portion of components from suppliers out of the US.

Analysis: Globalization condition hits GM with little chance of the last to have the right card in hands. The healthcare contracts does not give the company the required flexibility to get ahead with its business slowdown, a situation that reduces the company's strength even more. The competitors from the other hand are not tied to any union, and side by side with producing more cars and trucks they are increasing their productivity and getting help from their governments (See:GM Says Japan Helps Its Automakers Illegally). Although we are living in an open market and raised to believe that the market forces will set the pace, I believe that the US government should not be naive and make sure that all the players in the market are playing with the same rules, otherwise, US might loose its leading position for stupidity. Worthless to say that this might be a non-reversal condition.