GM to freeze hiring, not layoff

Every reputable financial news source from the FT to the Journal to the New York Times led their readers to believe that General Motors is laying-off workers.

At GM’s annual meeting yesterday, CEO Rick Wagoner announced plans to trim the North American workforce by 25,000 persons. Lay-offs seem like the obvious path to achieving this goal. But they aren’t. Rather, General Motors is entering a hiring freeze for the next three years, said Kevin Tynan, chief auto executive at Argus Research.

Every year, GM North America loses roughly 6,000 workers a year to retirement, so over a three hiring freeze the automaker will easily trim their force by 18,000 or 20,000. The remaining 5,000 or so workers will be laid-off. The success of this plan depends on the cooperation between the company and the United Auto Workers union, who’s contract stipulates that GM “re-employ.”

While this is not good news, it is better than the news portrayed by financial journalist worldwide.