GM Closing Plants and Employees Rush to Get Short Term Loans

GM Employees

GM employees are bracing for a lay-off by looking into short term loans. A 2-week summer layoff is typical with auto manufacturers. They normally change models to the next year’s style during this time. Unfortunately, due to lagging sales and overages of vehicles, GM is extending that layoff to 9 weeks, in an effort to save on factory expenses. The dates are not yet known, but normally the company shuts down in July. The only approved statement made was by spokesman Chris Lee who assured the media that employees would be informed before making an official statement, but the 9 week suspension is inevitable.

Some of the plants that manufacture more popular models will stay open, but only at a drastically reduced pace. This could mean thousands of workers are laid off during that time. Fortunately, due to United Auto Workers union contracts, the employees will get most of their money, but that still doesn’t set well with workers. One unidentified worker stated, “Sure I’ll get most of my money, but in this economy who can live with only part of their salary? Even a small cut means I have to rethink my bills.”

Most people these days are on strict budgets and even a small lag in pay can send finances into a tail-spin. Many workers seeing the issues surmount, are looking to short term loan funding as a way to save some cash while full salaries are still available. It’s a juggling act that most workers are willing to try in an effort to make their dollars stretch.

GM and the government bailout

GM is currently functioning on a $13.4 billion government loan and is under a strict June 1st deadline to restructure. Much of the restructuring includes debt reduction, which means labor cost cutting, and shutdowns. If the deadline isn’t reached effectively it’s almost certain that Chapter 11 bankruptcy protection will be their only other option.

GMs sales predicted closings

Automakers’ sales were down 49% in Q1, and plummeting quickly. Insiders say that the pending 9-week layoff is a confirmation that the company doesn’t see a pickup in sales anywhere in its near future. “They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building…It’s an ominous comment on what they see for the industry,” said Tom Libby, industry analyst.

Despite the bad news, GM employees still have enough time to brace for the change. Analysts say that the normal lay-off is expected by employees, so that makes a longer lay-off difficult, but not impossible to manage. Good budgeting and short term loans can help to get them through the coming few weeks.

Employees having to restructure the budgets

GM employees are ready to restructure their budgets. Fortunately with Union protection, they won’t feel as much of a cash crunch as employees in other industries do. That’s not to say that there is a calm feeling when getting laid off for a 9-week period either. The unidentified GM employee added, “I know because of Union protection we have it better than a lot of Americans do right now. But it still weighs down my finances to get a pay cut of any kind. I have to use short term loans and the generosity of my family in times like these. I can’t see it getting better anytime soon either.”