GM readies for new round of job cuts

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - General Motors Corp Chief Executive Rick Wagoner is slated to announce the automaker's second major restructuring package in six weeks on Tuesday as the company looks to cut costs and win back investor confidence in the face of slumping sales.

The cost-cutting will include widespread job cuts for white-collar workers, including engineers assigned to now-frozen efforts to develop GM's next generation of full-size SUVs and pickup trucks, people familiar with the plans said.

Analysts also expect GM to unveil a shake-up of its product portfolio to reflect steps intended to make the line-up more competitive on fuel efficiency.

In addition, GM is expected to detail steps to conserve cash -- including possibly eliminating dividend payments -- as it prepares to raise capital to carry it into 2010 when it will begin to capture large savings from a contract reached last year with the United Auto Workers union, analysts have said.

Shares of GM bounced higher by as much as 5 percent in after-hours trade after the news. The stock has lost about 63 percent since the start of the year.

GM executives, including Wagoner, scheduled a series of briefings for employees, analysts and reporters starting at 8:30 a.m. EDT on Tuesday.

The company said those briefings would include executives responsible for GM's financial performance and its product line-up and would detail what GM is doing to "align" its operations to current market conditions.

The largest U.S. automaker has been under intensifying pressure to cut costs because of a rapid shift away from trucks and SUVs and a decline in overall sales.

"I think it will be a pretty involved discussion," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. "I wouldn't expect them to leave much untouched."

David Healy, an analyst with Burnham Securities, said GM could cut "several thousand" white-collar jobs, make some temporary plant closings permanent and consolidate a vehicle line-up some analysts have criticized for overlapping too much between brands.

"Given the situation of the car market, the radical change in mix of what people want to buy and the fact that GM will probably lose from operations -- not including write-offs -- six to seven billion dollars this year, I think they are going to shrink the company more," Healy said.

In early June, Wagoner announced GM would close four North American truck plants employing about 100,000 workers and would try to sell its Hummer brand in response to higher gas prices.

But market sentiment has darkened on GM and the auto sector in the weeks since that announcement, with most analysts no longer expecting a real recovery in U.S. auto sales in 2009.

GM's U.S. sales were down 16 percent in the first half of the year, led by a 20 percent drop in sales of trucks.

CASH IS KING