It's no secret that the automotive industry is undergoing a bit of a transformation right now. What is surprising is that some are predicting that the transformation has just begun. Major layoffs from Ford, and more recently, employee buyouts from GM, means many more employees will be sent to early retirement. Restructuring of this magnitude will forever alter the way cars are manufactured and sold and, according to James McTevia, a Detroit-area restructuring consultant, "We haven't seen the last of it yet."

According to a recent Associated Press article (via The Tennessean), GM's buyout plan, one of the largest corporate buyouts in history, looks to thin it's workforce by 30,000 by 2008. To reach its goal, the company is offering between $35,000 and $140,000 to 113,000 U.S. hourly workers. Many analysts predict similar buyouts will go down at Ford Motor Co. and at auto suppliers that are struggling with the same high costs, fierce competition and overcapacity that plagues GM. For those keeping track at home, GM lost $10.6 billion in 2005. Ford earned $2 billion but lost $1.6 billion in its North American operations.

The point is this: more retired workers means less leverage against the corporate big-wigs. Organizations such as United Auto Workers have been in a downward spiral with their membership for the last few decades. There were 622,000 UAW members in 2004, down from 1.6 million active members at the UAW's peak in 1970.

But depending on your perspective, not all is doom and gloom across the industry. Toyota and Nissan, for instance, had their manufacturing plants running at full capacity last year. And countries like the Czech Republic claim the auto industry is the driving force of their economy, equaling some 20 percent of the country's overall production, according to this Prague Daily Monitor story. Highlights from the article detailing the positive impact include the following:

• The industry employs over 100,000 people, and more jobs would be created by Hyundai and its suppliers.

• Last year the number of cars produced in the Czech Republic for the first time topped 500,000 and reached almost 600,000 a 35 percent increase from 2004.

• Output of passenger cars grew by 35 percent, light utility vehicles by 9 percent, and buses by 11 percent, year on year.

• Car exports rose by 10 percent to 432,000 units.

Meanwhile, GM is trying to forget some of its financial woes by investing in innovation. Last month the company said it would invest $545 million to upgrade some of its Michigan factories, as well as add an estimated 280 jobs at its Pontiac plant later this year. And the company's European outfit, Adam Opel, unveiled the Opel GT at the Geneva Auto Show earlier this month, a $35,000 two-seater hell-bent on changing the minds of Europeans that felt GM cars were dull. Top brass at GM is betting that Opel's radical design will set GM Europe back on the path to profitability in 2006 after five years of steady losses.

Do you think innovation will help offset massive layoffs plaguing the auto industry?