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Company is hiring hundreds of American workers, building new facilities, and trying to improve efficiency

When you think General Motors Comp. (GM) you probably think of Detroit, Mich.  But the domestic automaker is also heavily invested in Texas, where it employes 4,500 people.  A two-shift plant in Arlington has 2,500 employees focused on building Chevrolet, GMC and Cadillac SUVs.  GM Financial employs 1,800 at various locations across the state.  And there's two call centers with a couple hundred employees, as well.

I. GM Expands Texas Hiring

And GM isn't backing down from its friendship with the Lone Star State, whose former governor George W. Bush was the original architect, and to this day ardent defender of the bailout and structured bankruptcy that arguably saved the company from liquidation.

The company today announced plans to build a new IT center in Austin, Texas which will hire 500 professionals.  Among the positions GM is looking to fill are software developers, project managers, database experts, and business analysts.

The center will be located just miles from other industry giants, such as Apple, Inc.'s (AAPL) largest U.S. call center and Samsung Electronics Comp., Ltd.'s (KSC:005930) massive chip fab.

Arlington Plant
Among other locations, the new Austin data center will help serve GM's large
Arlington, Texas SUV plant. [Image Source: GM]

The IT center is part of GM's bid to centralize its formerly scattered IT efforts, which often operated pseudo-automously on a site-per-site basis pre-bankruptcy.  The IT consolidation should both drive cost savings, and -- according to GM -- "drive breakthrough ideas".  GM says the Austin center is the "first of several new IT Innovation Centers".

 GM Chief Information Officer Randy Mott cheered the move in a press release, remarking:

We want IT to keep up with the imagination of our GM business partners, and to do that, we plan to rebalance the employment model over the next three years so that the majority of our IT work is done by GM employees focused on extending new capabilities that further enable our business.

We anticipate hiring as many as 500 new GM employees in Austin.  We look to the Innovation Centers to design and deliver IT that drives down the cost of ongoing operations while continuously increasing the level and speed at which innovative products and services are available to GM customers.

The next generation of IT workers, the talented visionaries we want contributing at the Innovation Center, are being trained at top computer science schools in Texas and surrounding states.  The IT Innovation Centers are critical to our overall IT business strategy and transformation.

II. Bailout Benefits Finally Being Realized?

GM is also adding a third shift to its Arlington plant, which could raise wages for some and add at least a few hundred more well-paying skilled labor jobs, which come with health care benefits and a pension.  GM is also opening a $200M USD part stamping plant which will "create or retain approximately 180 jobs".

GM data center workers
GM IT workers (L-R) Dan Krzywosinski, Neal Bond and Michelle Lauka try to resolve a client issue at a data center in Warren, MI.  The workers will soon be getting new colleagues in Texas, courtesy of a GM IT hiring/improvement effort. [Image Source: GM]

The company has drawn a lot of fire over the last couple years over accepting government money and opting for structured bankruptcy/government takeover instead of a liquidation.  However, the hiring spree is a welcome trend amidst mass layoffs from the likes of Research in Motion, Ltd. (TSE:RIM), Dell, Inc. (DELL), and Hewlett-Packard Comp. (HPQ) in the tech industry.

Of course, Ford Motor Comp. (F) is also in the relatively small minority of companies looking to expand its domestic manufacturing and professional workforce in the U.S., and it received a more limited amount of bailout funds (in the form of certain Recovery Act grants for advanced vehicle development).

Ultimately the U.S. government estimates its losses on the bailout of GM, Chrylser, Ford, and industry parts suppliers to be around $25.1B USD.  However, that figure does not account for preserved spending power and taxable GDP -- which will likely return billions to the government.  In the end it's clear that something was lost, but something was gained as well in the auto bailout.

Source: GM

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RE: Too early to know...
By inperfectdarkness on 9/8/2012 2:39:37 AM , Rating: 5
Those who claim the bailouts were a success typically only view the continued existence of GM as proof positive that it worked. That's like saying welfare works because you collect it.

The reality is, automobiles are a market whose demand is very stable. Eliminating one of the top manufacturers of automobiles would create a large vacuum within the industry--one which would quickly rushed to be filled by other existing competitors. The net result would be increased automotive production by Toyota, Nissan, Honda, BMW, VW, Audi, Hyundai and others. As we have already seen within the past 10+ years, these large foreign firms have found it more beneficial to create plants here in the US, rather than seeking to place them in China or Mexico.

So what would have happened without bailouts? UAW would have died completely. GM would have been broken into smaller pieces and sold to creditors who would have in turn sold those pieces to other existing auto firms. 90% of the existing workforce "endangered" by this bankruptcy would find employment under new management in a different company--doing virtually the same type of work.

The US has decided to elect leaders who have collectively decreed that it is better to allow their government to be insolvent--rather than mis-managed corporations. The problem is, corporations can effectively wipe out their debt by declaring bankruptcy and closing their doors. Governments can't do that.

There is no difference between bailing out a corporation due to financial insolvency--and bailing out an individual because they chose to spend above their means.

RE: Too early to know...
By Mathos on 9/8/12, Rating: 0
RE: Too early to know...
By tng on 9/8/2012 10:14:21 AM , Rating: 1
I always love the KILL THE UAW People...
I don't think that is what people wanted. It became obvious that the UAW had way to much say in how the company was being ran and had basically turned GM into a welfare state for it's members.

A bankruptcy would have allowed GM management to bring the company back to an acceptable stance with the UAW.

If GM disappeared completely, that would have left millions of vehicles out there that would need service and parts. I, for one, have no doubt that this would have spawned the opportunity for thousands of small businesses to fill the gap much more efficiently and would have arguably been better for the economy as well.

RE: Too early to know...
By TSS on 9/8/2012 5:26:41 PM , Rating: 2
Explain to me how a union is going to protect you from you employer when the union is the employer?

UAW does not equal Unions. Kill the UAW, not unions.

RE: Too early to know...
By Ringold on 9/9/2012 4:10:22 AM , Rating: 4
I'm not sure why everyone always assumes a GM bankruptcy would've meant destruction of GM as an entity with a stop on production, leading to dismemberment.

Airlines go through this all the time. They usually keep flying with zero disruption to service or clients, keep buying the goods and services that go in to its operation, even keep the ball rolling on future acquisition plans in terms of aircraft.

GM may well have gone in to bankruptcy protection and kept building, selling and servicing cars while its lawyers worked quickly in court to throw out specific contracts (like with the UAW and dealerships) that held it up, might've pre-negotiated the outlines of agreements with lenders, and emerged just like airlines do; leaner, meaner, and ready to continue the battle.

Only difference is the UAW would've lost out. Those that can't make the connection between a Democrat President and a "bail out" that eradicates secured bond-holders, shafts the companies suppliers workers, does as little as possible to help the company itself but gives a golden parachute and huge ownership stake to UAW is absolutely blind. It was a huge thank-you note from Obama to the UAW for decades of support for his party.

RE: Too early to know...
By topkill on 9/8/2012 2:07:38 PM , Rating: 2

"Those who claim the bailouts were a success typically only view the continued existence of GM as proof positive that it worked."

No, I clearly said that it could have gone either way and the outcome of the path they chose is still in doubt as would be the other path had they chosen it.

Whether Toyota, Honda, Hyundai, et al would have chosen to come into the same plants or let them lie fallow and move on to other ground in Tn, Ga, etc for cheaper non-union wages is a huge, open question. And we'll never know the answer other than the FACTS that we've seen both with more foreign mfr's choosing to open new plants rather than take on old, outdated equipment/sites. Would the net to the US have been the same? Maybe.

People who claim to know the outcome with certainty are the ones who are showing their ignorance. There are a few billion variables involved, but if you think you know exactly what would have happened, then you keep living in your fairy tale world but at least be smart enough to know you spout opinions rather than facts.

At least I was smart enough to offer an OPINION and admit it was just that.

RE: Too early to know...
By Ringold on 9/9/2012 4:01:42 AM , Rating: 3
Something you're not considering is the future, as well. The bailout, as previous bailouts in the industry did (remember, this isn't the first time), didn't do a great deal to change GM's existing contracts or costs. Not nearly as much as full bankruptcy protection would've, where GM could've likely continued business as usual while bankruptcy courts allowed them to tear up old contracts.

Another problem is it's almost inaccurate to say it was a GM bailout. GM's previous owners were essentially annihilated. The old GM ceased to exist. It's new owners are, for now, essentially the Treasury and the UAW. Ask bondholders or former shareholders if they feel like they got a "bailout" or if they got a 12-gauge slug to the backs of their skulls.

But back to where I was initially going.. With those old plants and old workers making largely the same old inflated wages, there's no need to look at "billions of variables" for long-run analysis. As long as the UAW has its legal privileges (in the form of infinite White House support), huge ownership stake and inflated wages, GM will not be competitive in the long run versus its peers, either domestic firms that went through bankruptcy or foreign ones that never let themselves be invaded by the union scourge to begin with. And what does all economists agree happens in the long run to uncompetitive firms? They die. Unless... they get government support, again.

So is a bailout that simply leaves in place conditions likely to require another bailout in the future really a success? Only in the most short-term of analysis, where you can get away with waving your hand and trying to suggest its too complicated to know.

Look to France as an example of how this sort of industrial policy leads to failure. They try as hard as they can to create laws to force employers to keep jobs there, they occasionally throw money at manufacturers, they let unions kidnap corporate executives, they acquire ownership stakes in companies. And yet, Frances manufacturers, generally speaking, still shed jobs, still go bankrupt, still bleed billions of euros, and still try as best they can to move jobs elsewhere. It's a losing game.

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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