Too Little Too LateOver the past several weeks, engineers and technicians working at General Motors Corp.'s sprawling proving grounds west of Detroit started noticing a curiosity: an increasing number of wall clocks had the wrong time, or stopped working altogether.
The reason: As part of a drive to cut $15 billion in costs, GM is no longer keeping the 562 clocks in working order, which will eliminate the expense of replacing and disposing of the clock's batteries and the cost of resetting them twice a year for daylight-saving time.
It's not the only new measure GM is taking to save every last nickel. In its Renaissance Center headquarters, employees working late have to climb stairs when navigating its labyrinth of lower floors -- the company now stops the escalators at 7 p.m. In designated cleanup areas of certain offices, the company has changed the type of wipe-up towels it buys. In a memo to employees, a staffer explained this will lower GM's "cost per wipe."
Like GM, Ford Motor Co. and Chrysler LLC are slashing costs. Earlier this month, Ford said it will cut its North American salaried work force by approximately 10%, and is trimming its capital spending, manufacturing, information-technology and advertising costs. GM and Chrysler have both halted or slowed work on new vehicles to cut development expenditures. Neither company held news conferences at the Los Angeles Auto Show last week, a standard function at such shows.
At GM, though, the penny-pinching is visible at the microscopic level, from cheaper pencils to elimination of voice mail in the plants.
Next year, GM isn't giving out its "Mark of Excellence" awards to its top-selling dealers. And it used to maintain a sizable fleet of cars for reporters to test drive, but has cut that back.
At the same time, GM has felt the heat for cutbacks it hasn't made. Last week Chief Executive Rick Wagoner flew on one of the company's corporate jets to Washington to ask for a bailout from taxpayers, a fact that raised the ire of some lawmakers. "There's a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands," Rep. Gary Ackerman (D.,N.Y.) said. "It's almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. ... I mean, couldn't you all have downgraded to first class or jet-pooled or something to get here?"
While Mr. Wagoner was able to travel on the corporate jet, GM has tightened its travel policy for thousands of employees in North America, telling them no air travel is allowed without written approval from senior managers.
Ford and GM scrambled to blunt the public-relations damage. Ford said it was exploring the sale of its five aircraft and GM, which leases the planes, said it had decided to get rid of two of its five remaining jets before last week's hearings. Tom Wilkinson, a spokesman, said GM has eliminated half the workers who staff its Detroit-based hangar and planes.
In view of their companies' dire finances, Mr. Wagoner and the CEOs of Ford and Chrysler were also asked on Capitol Hill last week if they would share in the sacrifice their employees have to make, and cut their salaries to $1. Mr. Wagoner and Ford's Alan Mulally declined. "I think I'm good where I am," said Mr. Mulally. Chrysler's Robert Nardelli said he would accept that, although he isn't paid a salary right now and he likely will be compensated if Chrysler's owner, Cerberus Capital Management LP, makes a return on its acquisition of the auto maker.
At GM's metal-fabricating plant in Grand Blanc, Mich., Steve Bean, a union committeeman, said he recently had to tell workers they would have to wait until at least next year to get $270 stipends they were promised in order to buy T-shirts, hats or coats emblazoned with their union local.
In addition, no settlements over grievances will be paid until next year. Grievance settlements are deals the company cuts with the union when a worker feels he or she wasn't properly paid or if the company violated work rules. Hundreds of such grievances are settled each year as a normal course of business.
"Someone might be owed eight hours of pay," he said. "All I can say is, 'If you're owed that money I'll get it to you, but not until Jan. 1 -- if we're still afloat.'"
Voice mail at most of the company's plants has been eliminated, a move that GM spokesman Tony Sapienza said saved something like "a million" dollars. Now, the only way to get union representatives or officers on the phone is to catch them at their desk or station. Recordings that used to say, "please leave a message," now say "please call back." "It's all good business practices, but now it's extreme business practices to the point where we're not wasting anything," Mr. Sapienza said. "We're cutting to the bare minimum."
At the proving grounds in Milford, Mich., where the clocks are now frozen in time, GM has switched to regular Ticonderoga No. 2 pencils instead of the more expensive mechanical pencils that used to be freely available in storage closets, known in GM-speak as "pull stations." Many of the moves have left employees scratching their heads. "Is this the best they can do to save money?" asked one engineer recently while checking the drawers at one pull station near his desk. "There's a lot of rubber bands but not much else -- a handful of pens and Post-It notes," he said.
Bill Jordan, president of UAW Local 599 in Flint, Mich., where GM builds engines, said he has noticed that the copy machines and printers that used to be spread out throughout the massive facility have disappeared. "They're doing their best to combine anything and everything they can to make it through the next few months," Mr. Jordan said.
