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GM to cut 30,000 jobs

Discussion in 'General Discussion' started by Quigley_Sharps, Nov 21, 2005.

  1. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    NEW YORK (Reuters) - General Motors Corp. (NYSE:GM - news) said on Monday it will cut about 30,000 jobs or 9 percent of its total work force, close or curtail operations at 12 plants in North America and slash the amount of vehicles it produces by 1 million as it attempts to reduce costs by $7 billion.

    The company warned that it will need to take a "significant restructuring charge" associated with this plan, but did not spell out how large a charge it would be or when it would be taken.

    GM Chief Executive Rick Wagoner said he was not prepared to discuss the company's 2006 profit outlook.

    "Fundamentally, if you look at our liquidity structure, we're on very sound financial footing," he said.

    The plants affected include those in Doraville, Georgia; an Oklahoma City plant that makes mid-size SUVs; plants in Ontario, Canada, Pittsburgh and Portland, Oregon; and its Lansing, Michigan Craft Center which makes a pickup truck.

    Wagoner earlier this year said he planned to cut manufacturing capacity to match demand by 2008.

    "It's a big move ... We're confident that this is what it's going to take to get us going," Wagoner said at a press conference in Detroit.

    GM said it hoped to be able to achieve many of these cuts through attrition and early retirement programs.

    The troubled automaker also said an agreement with the United Auto Workers union" will allow it to cut employee health care costs by about $3 billion annually.

    In premarket trading on the Inet electronic trading platform, General Motors shares were up 87 cents at $24.92. The auto giant has lost nearly $4 billion this year, while its shares have lost more than 40 percent of their value and hit a 14-year low last week.

    The new closings are in addition to the three assembly plants that GM has already closed or stopped production at this year: a car plant in Lansing, Michigan; an SUV plant in Linden, New Jersey; and a van plant in Baltimore.

    Wagoner said it has informed the UAW leadership of the moves, calling it "tough medicine for us and it's tough medicine for everyone involved."

    GM has been grappling with high health-care and commodities costs, loss of U.S. market share to foreign rivals, and slumping sales of large sport utility vehicles that used to be its profit centers, but have now lost popularity due to high gasoline prices.

    To make matters worse, GM's main parts supplier -- bankrupt Delphi Corp. (Other OTC:DPHIQ - news) -- is battling with its union"s and will ask the court to void its labor contracts if a deal is not reached by mid-December. A strike at Delphi could shut down some GM and Delphi plants and could force the automaker to burn through billions of dollars a week, analysts have said.
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