2006 TOP TEN Number 2

In January, General Motors Corp. posted a fourth-quarter net loss of $4.8 billion, a sea of red ink deeper than the most pessimistic Wall Street estimate, as costs for layoffs and plant closures soared. It was the fifth straight quarterly loss for the world's largest automaker -- amid high labor and raw materials costs, shrinking market share and sluggish sales of sport utility vehicles -- and brought its losses for all of 2005 to $8.6 billion. It was GM's first annual loss since 1992. Just days later, Ford announced a restructuring plan with preliminary reports indicating a loss of as many as 25,000 job cuts.

To soften the blow, The Michigan House voted to raise the state's minimum wage by $1.80. The bill was ratified, and the wage increase took effect this past October. By this coming July, the wage will automatically increase to $7.15.

Spring came with more job losses and hits to the automakers. Toledo based auto-parts maker Dana Corp. filed for bankruptcy protection for its U.S. operations joining a growing list of suppliers forced to make major restructuring moves because of the slumping industry. Dana supplies brakes, axles and other parts to both GM and Ford.

Rising labor costs, much of which the Big 3 attributes to health care costs for its employees, fueled Ford to expand its Restructuring plan. Closing plans were implemented for two plants in Virginia and Minnesota. The plants are set to shut down by 2008. By Fall rumors began to emerge from the Dearborn World Headquarters, when shares of Ford Motor Co. surged more than 4 percent, following a report that Ford Chairman and CEO had approached Nissan-Renault about joining a global alliance. Then amazingly just later, according to the trade journal Automotive News, executives of General Motors Corp. and Ford Motor Co. had discussed a possible alliance. Both companies declined to comment on the matter.

Taking a rule from GM's playbook, Ford announced a plan to offer buyouts to all of its hourly workers, cut 10,000 more salaried jobs and shut down two more plants in an effort to restore it to profitability. By the end of the year Ford had eliminated nearly one-third of its salaried positions. Up to 30,000 manufacturing jobs are expected to be cut throughout the coming year. Two additional plants were also added to the closing list. This time Ohio and Ontario, Canada will shut down boosting the plant closings from seven to nine.

By November, the cloud of demise could be seen from Detroit to Washington. President Bush decided to meet with executives from the Big 3 in the nation's capitol. They discussed a number of issues with the president, namely health care, trade and energy concerns. The Bush administration has contended that the U.S. economy, including manufacturing, was firing on all cylinders, and the president has said that Detroit's automakers needed to build more relevant vehicles, placing the blame on them.