General Motors Corp. announced today that it will reduce prices on most of its cars and trucks by between $500 and $2,000 for 60 days beginning Feb. 1, despite the company's failure to win contract concessions from the United Auto Workers union.
The company said it also would pay between $375 and $1,500 to non-fleet customers who have taken delivery of one of the affected vehicles between Jan. 13 and Feb. 1.
GM Chairman Roger B. Smith told a news conference that the price reductions were being made possible by cuts in the pay of the company's 137,500 salaried workers in the United States and Canada, and price cuts by its suppliers, as well as sacrifices by dealers.
The salaried workers will give up one full year of cost-of-living benefits, or about $1,000 a person, according to company officials. About 25 percent of the rebate program will be funded by dealers, and suppliers will cut 3 percent from prices of products sold to GM, Smith said.
Smith's announcement came one day after the company failed to win contract concessions from the UAW. Negotiators for the company and the union had tried off and on for three weeks to produce a contract that would reduce labor costs. The union and Ford Motor Co. are scheduled to resume similar negotiations on Monday. GM, at the insistence of the UAW, had pledged to pass the savings on to the consumer in the form of reduced car prices.
Both sides said such an agreement was needed to stimulate GM's seriously declining car sales and to save rapidly disappearing jobs in the auto industry. The new contract would have replaced a three-year agreement scheduled to expire Sept. 14.
But the talks were undermined by continuing disputes over job security, the size and distribution of wage and benefit concessions among all of GM's domestic employes, and the use of outside contractors--foreign and domestic--to produce GM parts.
UAW President Douglas A. Fraser said Thursday night--and Smith agreed today--that the talks also collapsed because of the absence of a key pressure point: the threat of a strike.
But Smith said today that the company has decided to bite the bullet and to make sacrifices it feels necessary--with or without the UAW--to spur sales. "This is our go-it-alone program," Smith said.
However, he said that does not mean the company regards the UAW as unnecessary. "They're still a good part of our family. We just have to go back and talk to them again and get them in with us," he said.
But Fraser has ruled out further negotiations until regularly scheduled talks this summer. Also, there was some speculation today that rank-and-file members might conclude that their sacrifices really were not needed to help reduce car prices. Any unionized GM worker who believes that "had better take a look around and hold onto his job," Smith said.
The GM chairman bluntly warned that the longer the company has to wait to reduce hourly labor costs, the more jobs the UAW will lose. "We're disappointed that we didn't get an agreement" with the union, he said. "But we're going to run our business.
"Right within two or three miles of this building are union workers working for eight dollars an hour less than we're paying our GM workers. Now, I say to you, some of those jobs that are in GM are going to go to those outside shops. That's just a fundamental law of economics," Smith said.
About 139,000 UAW members have been laid off from GM. About 326,000 are still employed, but Smith and others have warned that many of those jobs are in jeopardy as the result of the failure to reach an early contract settlement.
Cars that will be affected by the rebate program include the Cadillac Seville, with a $2,000 price cut; the new front-wheel-drive J cars such as the Buick Skyhawk and Cadillac Cimarron, $750; Chevrolet and GMC light-duty trucks, including pickups, Blazers, Jimmys, Suburbans and vans, $750; GM's popular front-wheel-drive X cars such as the Chevrolet Citation, $750; the subcompact Chevrolet Chevette and Pontiac T-1000, $500; the new intermediate front-wheel-drive A cars such as the Chevrolet Celebrity and Oldsmobile Cutlass Ciera, $500; and the Chevrolet S-10, GMC S-15 and Chevrolet Luv pickups, $500.
Smith said GM will pay an allowance by check to the customer after the sale or, if preferred, the allowance may be applied to the down payment on the purchase.