GM to cut production if demand worsens: exec

By Jui Chakravorty Das

DETROIT (Reuters) - General Motors Corp (GM.N) will make additional production cuts in the United States if demand for vehicles comes in much softer than expected, the automaker's head of North American operations said on Sunday.

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.

"Certainly if demand is a lot less than what we are projecting in the first quarter, that would predicate some additional production cuts and we would step right up and make those," Troy Clarke told reporters at the North American International Auto Show.

However, Clarke added that GM's year-end inventory levels of 908,000 units seems appropriate.

"Everyone is concerned about the economy. But in some regards what we are seeing in credit, real estate, fuel prices -- none of this stuff has snuck up on the public," Clarke said.

Earlier in the day, GM CEO Rick Wagoner told reporters he estimated total U.S. industry sales to come in at 16.3 million to 16.5 million units in 2008.

Full-year 2007 sales dropped almost 3 percent to 16.14 million vehicles, the lowest since 1998.

NEW BUYOUTS

Clarke also said the automaker was negotiating the roll-out of another attrition program as part of the labor deal it reached with the United Auto Workers union late last year. He said he expects an announcement on the next round of buyouts within a week.

"Talks were first aimed at existing job banks. From there we are moving into the opportunities to utilize the second-tier work force," Clarke said.

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

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 negotiating plant by plant, group by group ... how to roll out the attrition program, how to create space for second-tier workers," Clarke said. "Give us a couple more days, maybe a week before we can give you the information."

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

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