GM to ax 30,000 jobs, close 12 facilities
Updated: 2005-11-22 07:08
General Motors Corp., pounded by declining sales and rising health care
costs, said Monday it will cut more than a quarter of its North American
manufacturing jobs and close 12 facilities by 2008. The United Auto Workers
called the plan "devastating" and warned it will make negotiations more
difficult, but some Wall Street analysts said GM's actions may not go far
To get production in line with demand, GM will cut 30,000 jobs, which
represent 17 percent of GM's North American hourly and salaried work force of
173,000, and will close nine assembly, stamping and powertrain plants and three
parts facilities. GM's U.S. market share fell to 26.2 percent in the first 10
months of this year compared with 33 percent a decade ago, the result of
increasing competition from Asian rivals. GM lost almost $4 billion in the first
nine months of this year.
Rick Wagoner, chairman and CEO of General
Motors Corp. announces plans at the company's headquarters in Detroit,
Monday, Nov. 21, 2005 to cut 30,000 manufacturing jobs and close nine
North American assembly, stamping and powertrain facilities by 2008 as
part of an effort to get production in line with demand and return the
company to profitability and long-term growth.
"The decisions we are announcing today were very difficult to reach because
of their impact on our employees and the communities where we live and work," GM
Chairman and Chief Executive Rick Wagoner said. "But these actions are necessary
for GM to get its costs in line with our major global competitors."
GM isn't the only U.S. automaker cutting costs. Last week, Ford Motor Co.
told employees it plans to eliminate about 4,000 white-collar jobs in North
America early next year as part of a restructuring plan.
GM said the plant closings are part of a plan to shave $7 billion off its $42
billion annual bill for operations by the end of next year. That includes a $3
billion cut in health care costs, $1.5 billion in manufacturing cuts and $1
billion in savings on materials.
The company's shares fell 47 cents, or 2 percent, to close $23.58 in trading
on the New York Stock Exchange. They have traded in a 52-week range of $20.60 to
Standard & Poor's Ratings Services, which lowered GM's debt to "junk"
status earlier this year, said the company remains on credit watch. S&P said
the staff cuts are substantial but may not be adequate considering GM's
problems, including a possible strike at Delphi Corp., its largest supplier; an
ongoing federal investigation into accounting errors; and an uncertain outlook
for its new lineup of full-size sport utility vehicles, which may fall victim to
consumer concerns about gas prices.
Goldman Sachs analyst Robert Barry said those headwinds could offset any
gains from the cuts.
"We are not confident the restructuring addresses the core issue that GM
brings too much supply to the North American market," Barry said in a note to
GM has 77 facilities in North America, including 30 assembly plants, 23
stamping plants and 24 engine and transmission plants, spokesman Stefan Weinmann
Wagoner said the job cuts will come primarily through attrition and
early-retirement packages to mitigate the impact on workers. GM has an annual
attrition rate of about 7 percent, Wagoner said. The average hourly worker is
around 49 years old, he said.
Some workers who don't choose to retire could go into jobs banks, which pay
laid-off workers their salary and benefits. Wagoner said details about layoffs
and early-retirement packages still need to be worked out with the UAW, the
Canadian Auto Workers and other unions.