Worsening economy could slow GM turnaround: CEO

DETROIT (Reuters) - General Motors Corp's GM.N North American turnaround could slow down if the U.S. economy worsens this year, the automaker's chief executive said on Sunday.

"The probability of it getting worse looks quite low," Rick Wagoner told reporters at the North American International Auto Show. "But sure it would slow down the turnaround. We need to work on cost and revenue. And obviously it would slow down revenue, which would slow down the financial results."

Higher gasoline prices combined with a weak housing market have raised concerns that the U.S. economy could tip into recession in 2008 and cause consumers to delay big-ticket purchases such as new vehicles.

The largest U.S. automaker, which lost more than $10 billion in 2005 and 2006, is in the midst of a restructuring that includes slashing more than 34,000 jobs and closing 12 plants in North America.

The automaker has removed $9 billion in structural costs and reached a deal with the United Auto Workers union late last year that would allow it to slash more costs.

Wagoner said GM could begin hiring low-wage union workers -- a provision it garnered as part of the new labor contract -- as soon as the second quarter of this year.

GM is working with the UAW to offer buyouts to current UAW workers, paving the way for thousands of employees to be hired at wages less than half that of GM's current hourly workers, Wagoner said.

The automaker last month said it was offering buyouts to 5,200 workers, and is now working to cut a deal on a second phase of retirement and buyout offers for more employees in GM's 72,000 blue-collar work force.

"We are still working through the timing with the UAW," Wagoner said. "The first wave has some opportunities for hiring of tier two. We see some potential opportunity for second-tier hires in the second quarter, third quarter."

Analysts expect the entire attrition program to net 11,000 jobs in 2008.

(Reporting by Jui Chakravorty; editing by Mark Porter)