Downsizing at General Motors

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Table of Contents Abstract 1 Introduction 2 Company Overview 2 Restructuring Change 3 Change Challenges of Downsizing 5 Images of Change 6 Pressures to Change 6 Market Decline Pressure 6 Fashion Pressures 7 Mandated Pressures 7 Result of Change 7 Conclusion 8 References 9

Abstract
This paper explores the change that General Motors faced after the economic recession and credit crisis that began in 2007. This pushed GM to request assistance from the U.S. Treasury which resulted in the restructuring of their US operations. The start of this restructuring change involved downsizing GM’s operations in the US. Along with the mandate imposed from the US government GM engaged in downsizing to reduce costs, and to cope with the external pressures. The pressures that propelled GM to change included market decline pressure, fashion pressures, and mandated pressures. In its restructuring, GM closed plants, cut its workforce, shed three brands, reduced debt, introduced popular new vehicles, and implemented changes to reduce retiree legacy costs, which had been a major financial drain (Canis & Webel, 2013). Although this downsize had a lot of negative results, including employee morale and retention, the overall effects of this change on GM’s operations were positive as their share price and finances grew since they filed for bankruptcy. Therefore, the change that GM executed was done effectively and helped the company keep their company standing.

Introduction
Given the speed and depth of the economic crisis that began in 2007 many companies engaged in downsizing as a way to cut costs and adapt to changing market demands. Many automotive companies experienced significant declines in sales and revenue due to the precipitous drops in demand for automobiles and the growing switch to smaller, more fuel efficient, vehicles. The recession and global credit crisis not only affected smaller auto retailers but also the larger ‘big three’ auto manufacturers Ford, General



References: Canis, B., & Webel, B. (2013, January 3). The role of TARP assistance in the restructuring of General Motors. Federation of American Scientists. Retrieved February 6, 2013, from http://www.fas.org/sgp/crs/misc/R41978.pdf General Motors. (n.d.) Retrieved February 01, 2013, from http://www.gm.com/company/aboutGM/our_company.html Isidore, C. (2009, June). GM bankruptcy: End of an era. CNN Money. Retrieved February 3, 2013, from http://money.cnn.com/2009/06/01/news/companies/gm_bankruptcy/index.htm Palmer, I., Dunford, R., Akin, G. (2009). Managing organizational change. (2nd ed). McGraw-Hill Irwin Puzzanghera, J., & Bensinger, K. (2009, April 28). GM proposes painful downsizing in bid for survival. Los Angeles Times. Retrieved February 1, 2013, from http://articles.latimes.com/2009/apr/28/business/fi-gm28 Smerd, J. (2009, May). GM’s Downsizing Strategy Moving With Great Efficiency. Workforce. Retrieved February 4, 2013, from http://www.workforce.com/article/20090504/NEWS01/305049993/gm-s-downsizing-strategy-moving-with-great-efficiency

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