mikeyb
11-22-2005, 09:50 AM
Nov 21, 2005 — DETROIT (Reuters) - General Motors Corp. <GM.N> said on Monday it will cut more than a quarter of its North American manufacturing jobs and slash the number of vehicles it produces as the world's No. 1 automaker struggles for survival.
The 30,000 job cuts represent 27 percent of the company's total North American manufacturing work force, using GM data from the end of last year. It is the largest GM cut since December 1991, when it said it would close 21 plants and eliminate 74,000 jobs.
The latest plan, which affects at least a dozen plants in the United States and Canada, would allow the company to achieve $7 billion in cost reductions by the end of 2006 — $1 billion above its previous target and represents 5,000 more job cuts than the auto maker had previously indicated.
GM warned that it will need to take a "significant restructuring charge" associated with this plan, but did not spell out how large a charge it would be or when it would be taken.
GM Chairman and Chief Executive Rick Wagoner said he was not prepared to discuss the company's 2006 profit outlook.
"Fundamentally, if you look at our liquidity structure, we're on very sound financial footing," he said.
In Monday trading, General Motors shares were up 20 cents, or 0.8 percent, at $24.25 on the New York Stock Exchange. The auto giant has lost nearly $4 billion this year, while its shares have lost more than 40 percent of their value and hit a 14-year low last week.
The plants affected include those in Doraville, Georgia; an Oklahoma City plant that makes mid-size SUVs; plants in Ontario, Canada, Pittsburgh and Portland, Oregon; and its Lansing, Michigan Craft Center which makes a pickup truck.
Wagoner earlier this year said he planned to cut manufacturing capacity to match demand by 2008.
"It's a big move … We're confident that this is what it's going to take to get us going," Wagoner said at a press conference in Detroit.
GM said it hoped to be able to achieve much of these cuts through attrition and buyouts.
This marks the largest single U.S. layoff announcement since Kmart said it would cut 37,000 jobs in January 2003, according to employment consulting firm Challenger, Gray & Christmas.
The new closings are in addition to the three assembly plants that GM has already closed or stopped production at this year: a car plant in Lansing, Michigan; an SUV plant in Linden, New Jersey; and a van plant in Baltimore.
Wagoner said the company has informed the leadership of the United Auto Workers union of the moves, calling it "tough medicine for us and it's tough medicine for everyone involved."
ON THE FIRING LINE
As GM tries to turn itself around, the pressures on Wagoner have mounted amid concerns that nothing short of a change at the top will help improve the automaker's fortunes.
Wagoner rose to the helm of the company in 2000 and took control of daily operations at its struggling North American unit in April 2005. On Monday, he discounted the notion of stepping aside.
"I haven't given any consideration whatsoever to that. I wasn't brought up to run and hide when things get tough," he said. "We're on the battlefield, we're taking the actions we need to and I'm convinced that's the way the company is going to get righted."
Wall Street remained uncertain about his strategy.
"The CEO is effectively trying to calm the markets and show that he's still in control," said Richard Steinberg of Steinberg Asset Management. "We would anticipate management changes over the next couple of years if they don't figure out a game plan."
Wagoner has also been under pressure from investor Kirk Kerkorian, who owns 9.9 percent of GM's stock, and may demand a seat on the board next year.
"I don't want to comment on specific conversations with Mr. Kerkorian, as we don't with any other shareholders," Wagoner said on Monday.
GM has been grappling with high health-care and commodities costs, loss of U.S. market share to foreign rivals, and slumping sales of large sport utility vehicles that used to be its profit centers, but have now lost popularity due to high gasoline prices.
To make matters worse, GM's main parts supplier — bankrupt Delphi Corp. <DPHIQ.PK> — is battling with its unions and will ask the court to void its labor contracts if a deal is not reached by mid-December. A strike at Delphi could shut down some GM and Delphi plants and could force the automaker to burn through billions of dollars a week, analysts have said.
source:http://abcnews.go.com/Business/wireStory?id=1333509&page=2
The 30,000 job cuts represent 27 percent of the company's total North American manufacturing work force, using GM data from the end of last year. It is the largest GM cut since December 1991, when it said it would close 21 plants and eliminate 74,000 jobs.
The latest plan, which affects at least a dozen plants in the United States and Canada, would allow the company to achieve $7 billion in cost reductions by the end of 2006 — $1 billion above its previous target and represents 5,000 more job cuts than the auto maker had previously indicated.
GM warned that it will need to take a "significant restructuring charge" associated with this plan, but did not spell out how large a charge it would be or when it would be taken.
GM Chairman and Chief Executive Rick Wagoner said he was not prepared to discuss the company's 2006 profit outlook.
"Fundamentally, if you look at our liquidity structure, we're on very sound financial footing," he said.
In Monday trading, General Motors shares were up 20 cents, or 0.8 percent, at $24.25 on the New York Stock Exchange. The auto giant has lost nearly $4 billion this year, while its shares have lost more than 40 percent of their value and hit a 14-year low last week.
The plants affected include those in Doraville, Georgia; an Oklahoma City plant that makes mid-size SUVs; plants in Ontario, Canada, Pittsburgh and Portland, Oregon; and its Lansing, Michigan Craft Center which makes a pickup truck.
Wagoner earlier this year said he planned to cut manufacturing capacity to match demand by 2008.
"It's a big move … We're confident that this is what it's going to take to get us going," Wagoner said at a press conference in Detroit.
GM said it hoped to be able to achieve much of these cuts through attrition and buyouts.
This marks the largest single U.S. layoff announcement since Kmart said it would cut 37,000 jobs in January 2003, according to employment consulting firm Challenger, Gray & Christmas.
The new closings are in addition to the three assembly plants that GM has already closed or stopped production at this year: a car plant in Lansing, Michigan; an SUV plant in Linden, New Jersey; and a van plant in Baltimore.
Wagoner said the company has informed the leadership of the United Auto Workers union of the moves, calling it "tough medicine for us and it's tough medicine for everyone involved."
ON THE FIRING LINE
As GM tries to turn itself around, the pressures on Wagoner have mounted amid concerns that nothing short of a change at the top will help improve the automaker's fortunes.
Wagoner rose to the helm of the company in 2000 and took control of daily operations at its struggling North American unit in April 2005. On Monday, he discounted the notion of stepping aside.
"I haven't given any consideration whatsoever to that. I wasn't brought up to run and hide when things get tough," he said. "We're on the battlefield, we're taking the actions we need to and I'm convinced that's the way the company is going to get righted."
Wall Street remained uncertain about his strategy.
"The CEO is effectively trying to calm the markets and show that he's still in control," said Richard Steinberg of Steinberg Asset Management. "We would anticipate management changes over the next couple of years if they don't figure out a game plan."
Wagoner has also been under pressure from investor Kirk Kerkorian, who owns 9.9 percent of GM's stock, and may demand a seat on the board next year.
"I don't want to comment on specific conversations with Mr. Kerkorian, as we don't with any other shareholders," Wagoner said on Monday.
GM has been grappling with high health-care and commodities costs, loss of U.S. market share to foreign rivals, and slumping sales of large sport utility vehicles that used to be its profit centers, but have now lost popularity due to high gasoline prices.
To make matters worse, GM's main parts supplier — bankrupt Delphi Corp. <DPHIQ.PK> — is battling with its unions and will ask the court to void its labor contracts if a deal is not reached by mid-December. A strike at Delphi could shut down some GM and Delphi plants and could force the automaker to burn through billions of dollars a week, analysts have said.
source:http://abcnews.go.com/Business/wireStory?id=1333509&page=2