Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 13 pages
Data source: Published sources
Share a link:
https://casecent.re/p/66292
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
General Motors (GM), which has maintained its number one position in Fortune magazine''s annual top 500 list over the years, is into losses worth US$1.6 billion in the third quarter of 2005, mainly due to losses at its North American operations. The GM management cited rising healthcare and labour costs as major reasons for losses. But, the United Auto Workers (UAW) felt that vehicle design, product development and foreign competition were the major reasons for the company''s losses. The opposing positions between the two (GM and UAW) had hindered negotiations concerning reduction of healthcare costs, job cuts, outsourcing and sub-contracting. Finally on 17 October 2005, GM announced its deal with the UAW which agreed to reduce its healthcare costs for retirees by US$15 billion and its annual employee healthcare expenses by US$3 billion a year. Other than reducing costs, GM had also planned to increase revenue by refocusing on sales, marketing and development of new models. While chronicling various labour-related legacy costs, the case study enables discussions on whether GM''s eroding profitability is to be blamed wholly on these legacy costs.
About
Abstract
General Motors (GM), which has maintained its number one position in Fortune magazine''s annual top 500 list over the years, is into losses worth US$1.6 billion in the third quarter of 2005, mainly due to losses at its North American operations. The GM management cited rising healthcare and labour costs as major reasons for losses. But, the United Auto Workers (UAW) felt that vehicle design, product development and foreign competition were the major reasons for the company''s losses. The opposing positions between the two (GM and UAW) had hindered negotiations concerning reduction of healthcare costs, job cuts, outsourcing and sub-contracting. Finally on 17 October 2005, GM announced its deal with the UAW which agreed to reduce its healthcare costs for retirees by US$15 billion and its annual employee healthcare expenses by US$3 billion a year. Other than reducing costs, GM had also planned to increase revenue by refocusing on sales, marketing and development of new models. While chronicling various labour-related legacy costs, the case study enables discussions on whether GM''s eroding profitability is to be blamed wholly on these legacy costs.