Like a Rock–Not
GMs’ plan to lay off 30,000 employees in North America represents a stunning 27% reduction in its workforce in the hemisphere.
Two things came to mind when I read the news today:
- Bob Seger, whose agreement to let Chevy use his hit song “Like a Rock” is credited with turning that truck operation around in 1991 and was used until 2004. I always thought that it was ironic that the song was used, given what it’s really about–looking back at a simpler, more robust time in one’s life when “I still believed in my dreams.” And it seems that a lot of people who deserve better are coming to the end of that song. I wish them the best; they deserved better from their company and their union.
- I noticed that one of the plants to be closed is in Spring Hill, TN. That’s also very sad, as it’s one of the original Saturn plants–you know, the “different kind of company” that operated with relative independence for so many years, but eventually got sucked into GM’s corporate vise, and its problems. Nobody thought of it at the time, but maybe they should have sold or spun off the whole thing in its heyday.
Leading Indicators Advance
Though it was expected in light of what has already been reported (lower unemployment claims, etc.), the fact that the leading indicators made up what was lost in September is stunning. It indicates that in addition to the lingering effects of the Gulf storms, the economy seems to be shaking off the impact of the airline and Delphi bankruptcies, the problems at GM and Ford, higher interest rates, and the September-October surge in personal bankruptcy filings ahead of the law change.
It will be interesting to see what the consumer confidence numbers look like.
NWA Stiff Hotels in Advance of Its Bankruptcy Filing
NWA’s filing came on pretty suddenly, and many hotels in the airline’s headquarters city were caught off guard:
In the months before filing for Chapter 11 bankruptcy, Northwest Airlines Corp. ran up hundreds of thousands of dollars in local hotel bills.
But when the Eagan-based carrier entered the protective folds of bankruptcy court, the hotels were left out. Now the hotels are writing off the bad debt, and many managers are a bit miffed at the airline.
“Our position is we’re not expecting anything, and we’re not expecting it for a long time,” said Steve Harper, general manager of the Radisson Riverfront Hotel and Radisson City Center Hotel in St. Paul, which together are owed $150,000 by Northwest.
Some of the debt represents everyday transactions between airlines and hotels — putting up crews and displaced passengers, for instance. But the St. Paul Radisson hotels, along with at least a dozen others in the metro area, participated in Northwest’s strike-contingency plans in the months leading up to an August walkout by the Aircraft Mechanics Fraternal Association. Several hotel managers attributed most of the unpaid bills to that effort.
Northwest housed 1,000 replacement mechanics in hotels here and elsewhere, but also conducted training for replacement flight attendants at local hotels and conference centers to prepare for a possible sympathy strike by the flight attendants’ union. (In the end, attendants didn’t strike.)
Northwest began that training months before the strike and paid some of the hotel bills earlier in the year.
But many hotels still absorbed financial hits of $50,000 to $100,000. While a $100,000 bad-debt charge won’t sink a big hotel — the St. Paul hotels managed by Harper have combined annual revenues of about $30 million, for example — it’s still significant.
“That would totally throw a lot of hotels out of achieving their budgets,” said one general manager, who asked not to be identified.
Since budget targets are often linked to employee bonuses, the write-off has engendered some bad blood.
Bad blood? I would think so. People in the hospitality business aren’t exactly paid like airline mechanics.
I thought there were rules about debts incurred “in contemplation of bankruptcy.” Any such debts are essentially treated as first in line to be paid. I have to wonder why the hotels aren’t pursuing this angle to recover some of their money. Can doing business with a bankrupt airline that might ultimately liquidate be that attractive?