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| GM Announces Plans To Close Facilities, Slash 30,000 Jobs POSTED: 8:16 am EST November 21, 2005 UPDATED: 8:52 am EST November 21, 2005 DETROIT -- General Motors Corp. announced plans Monday to cut 30,000 manufacturing jobs and close nine North American assembly, stamping and powertrain facilities by 2008 as part of an effort to get production in line with demand. Rick Wagoner, chairman and CEO of the world's largest automaker, announced the closures during a speech to employees from GM's Detroit headquarters before the financial markets opened. Wagoner said GM also will close three service and parts operations facilities. "The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," Wagoner said. "But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible." GM said the plan is to achieve $7 billion in cost reductions on a running rate basis by the end of 2006 - $1 billion above its previously indicated target. The number of job cuts also was above earlier estimates. GM said earlier this year it planned to cut 25,000 jobs by 2008, mostly through attrition. GM said the plants that will close are in Oklahoma City, Lansing, Mich., Spring Hill, Tenn., Doraville, Ga., and Ontario, Canada. GM shares rose 65 cents to $24.70 in premarket trading. They had traded last week below $21 at their lowest levels in 18 years. Wagoner said last month that the automaker would announce plant closures by the end of this year to get its capacity in line with U.S. demand. GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals. The plant closings aren't expected to be final until GM's current contract with the United Auto Workers expires in 2007. Wagoner also announced earlier this year that GM plans to cut 25,000 jobs by 2008, mostly through attrition. GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity. Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp. GM lost nearly $4 billion in the first nine months of this year. The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees. GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors. Last week, after the automaker's shares fell to their lowest level in 18 years, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy. "I'd like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to employees which was posted on an internal Web site. GM is not the only U.S. automaker faced with the need to cut costs. Last week, Ford Motor Co. told employees it plans to eliminate about 4,000 white-collar jobs in North America early next year as part of a restructuring plan. Ford spokesman Tom Hoyt said the cuts will be made in part through attrition and elimination of some agency and contract positions. He said the plans were outlined Friday in an e-mail to employees from Mark Fields, president for the Americas. The cuts will be in addition to 2,750 North American salaried jobs that Ford earlier said it wanted to cut by the end of 2005. Ford started the year with about 35,000 salaried workers in North America, Hoyt said. Dearborn-based Ford reported a third-quarter loss of $284 million, including a loss of $1.2 billion before taxes in North America. |
