GM to slash 25,000 jobs in U.S. by '08

Click here: Herald.com 06/08/2005 GM to slash 25,000 jobs in U.S. by '08
Posted on Wed, Jun. 08, 2005

AUTOMOTIVE INDUSTRY


GM to slash 25,000 jobs in U.S. by '08

In an attempt to restore profitability, GM announced plans to cut 25,000 manufacturing jobs in the United States by 2008.

BY JOHN PORRETTO

Associated Press


WILMINGTON, Del. - General Motors Corp. plans to close plants and eliminate 25,000 manufacturing jobs in the United States by 2008 in an attempt to restore profitability at the world's largest automaker, its chairman said Tuesday as he fended off calls for his resignation.

Chairman and Chief Executive Rick Wagoner told shareholders at GM's 97th annual meeting in Delaware that the capacity and job cuts should generate annual savings of roughly $2.5 billion. About one out of six jobs in the United States will be eliminated.

Wagoner revealed the cutbacks as he laid out a strategy to invigorate GM's North American operations, its biggest and most troubled, amid lackluster sales of its highly profitable trucks and sport utility vehicles, which have been hurt by high fuel prices.

GM posted a $1.1 billion loss in the first quarter and its U.S. market share has fallen to 25.4 percent from 27 percent a year ago, as customers increasingly are choosing models from Toyota Motor Corp., Nissan Motor Co. and other Asian automakers.

The cuts would be on top of earlier reductions that pared GM's U.S. workforce from 177,000 hourly and salaried employees at the end of 2000 to 150,000 at the end of last year, according to figures provided by GM.

''Let me say up front that our absolute top priority is to get our largest business unit back to profitability as soon as possible,'' said Wagoner, who added that with $20 billion in cash and short-term investments, GM is in no danger of going out of business anytime soon.

''But if we don't fundamentally get at these structural issues -- whether it's gee-whiz, exciting products, or the right distribution, or a solid cost structure in every element of business -- the risk of continually being weakened over time is real,'' he said.

Wagoner wouldn't say which plants are in danger of being closed, but David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said the most likely targets are several older plants. Those include facilities in Janesville, Wis.; Doraville, Ga.; Oklahoma City and Pontiac, Mich., he said. The Janesville plant was built in 1919 and the Doraville plant was built in 1947. The other two plants were built in the 1970s.

Cole said GM probably won't close plants that have recently undergone costly renovations, such as the plant in Lordstown, Ohio, that recently got $1 billion worth of upgrades.

Disgruntled shareholders, who saw the value of their shares fall to a 10-year low in April, gave Wagoner an earful on Tuesday.

Shareholder John Lauve compared the GM leadership to officers aboard the Titanic as it headed for its infamous iceberg. ''The Titanic sank because the directors ignored the warnings,'' said Lauve, who criticized everything from gas gauges in GM vehicles to the company's healthcare cards. ``We need to excel at the basics.''

Fending off such criticism, Wagoner outlined four pressing priorities: increasing spending on new cars and trucks; clarifying the role of each of GM's eight brands; intensifying efforts to reduce costs and improve quality; and continuing to search for ways to reduce skyrocketing healthcare expenses.