GM to cut 10,000 salaried jobs

DETROIT Tue Feb 10, 2009 1:29pm EST

Twenty-three-year GM employee Bob Pohlman performs an electrical component installation for the last time on a truck at the GM plant in Janesville, Wisconin December 23, 2008. REUTERS/Bill Olmstead

Twenty-three-year GM employee Bob Pohlman performs an electrical component installation for the last time on a truck at the GM plant in Janesville, Wisconin December 23, 2008.

Credit: Reuters/Bill Olmstead

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DETROIT (Reuters) - General Motors Corp will slash its global salaried work force by about 10,000, or 14 percent, this year and impose pay cuts on most remaining white-collar U.S. workers as it scrambles to reduce costs under a restructuring mandated by its U.S. government bailout.

GM, which was granted $13.4 billion of government loans in December, said on Tuesday it would cut its salaried work force to about 63,000 from 73,000 during 2009.

In the struggling automaker's home market, about 3,400 of 29,500 white-collar jobs will be cut. At the start of the decade, GM had 44,000 salaried employees in the United States, the majority of them in southeast Michigan.

Most jobs will be cut by May 1, and most remaining U.S. staff will see pay cuts of between 3 percent and 10 percent for the year, GM said.

The job and pay cuts come in addition to buyout offers for GM's union workers and represent the latest step by the automaker to pare its operations ahead of a deadline to present a restructuring plan to the U.S. government on February 17.

The moves also add to a growing toll from the downturn for U.S. automakers that began in 2005 and drove both GM and Chrysler LLC to the brink of failure in 2008 as the recession deepened.

Chrysler LLC, which also received $4 billion in government loans and is seeking an additional $3 billion, is currently offering buyouts to its U.S. hourly work force after cutting more than 8,000 salaried jobs in 2008.

"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in a statement.

GM's sales in January plunged 49 percent and the automaker has said it expects industrywide U.S. sales to be near 10.5 million vehicles in 2009, extending a four-year slump that has taken the market to the lowest levels since the early 1980s.

As a result, GM executives have said the company is looking for deeper and faster cost-cutting under the restructuring plan that will be submitted to the U.S. Treasury under terms of its $13.4-billion bailout.

GM has offered buyouts to its 62,000 U.S. workers represented by the United Auto Workers union. The automaker remains in talks with both the UAW and bondholders in an attempt to slash its outstanding debt.

GM spokesman Tom Wilkinson said the cuts would not be made across the board, but would be based on specific staffing needs for each department in response to changing consumer demand.

For example, GM may still need to hire more engineers for its next-generation battery business as the company pushes for the development of plug-in electric vehicles, Wilkinson said.

He added that some countries may take deeper cuts depending on sales trends in those markets.

GM said U.S. executive pay would be cut 10 percent for the rest of 2009. Other salaried U.S. workers will face pay cuts of between 3 percent and 7 percent, it said.

GM also said it would review the pay and benefits its workers outside the United States receive.

In Germany, GM's Opel unit is not planning any job cuts despite the push to cut costs, a union official said. Opel's works council chief Klaus Franz told Reuters in Frankfurt that job cuts are currently not on the agenda at Opel.

Salaried workers in the United States whose jobs are eliminated will be eligible for severance pay and some benefit assistance, GM said.

GM had suspended some benefits for salaried workers in November and said then that it would aim to cut 30 percent of its white-collar payroll costs in North America.

But the slump in global auto sales has deepened in the three months since and increased the pressure on GM to slash costs and conserve cash to avoid bankruptcy.

GM, Ford Motor Co and Chrysler have shed about 140,000 jobs since 2005 and almost half of their workforce since the start of the decade.

The job cuts have been especially damaging in Michigan, home to the headquarter operations for all three automakers. The state's unemployment rate hit 10.6 percent in December, the highest rate in the nation.

GM's shares were off about 5 cents, or 1.7 percent, at $2.78 at midday on the New York Stock Exchange.

(Additional reporting by Angelika Gruber in Frankfurt, Patrick Fitzgibbons in New York; Editing by Derek Caney and Maureen Bavdek)