General motors to cut 30,000 jobs

General Motors will cut 30,000 jobs and close nine North American assembly, stamping and powertrain plants by 2008 as part of an effort to get production in line with demand and position the world’s biggest carmaker to start making money again after absorbing nearly €3.4bn in losses so far this year.

The announcement today by Rick Wagoner, GM’s chairman and CEO, represents 5,000 more job cuts than the 25,000 that the carmaker had previously indicated it planned to cut.

The 30,000 job cuts represents about 9% of GM’s global work force of about 325,000 people.

“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 told employees.

“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.”

The plan will cut the number of vehicles GM is able to build in North America by about 1 million a year by the end of 2008.

GM said the assembly plants that will close are in Oklahoma City; Lansing, Michigan; Spring Hill, Tennessee; Doraville, Georgia; and Ontario, Canada. A shift also will be removed at a plant in Moraine, Ohio.

An engine facility in Flint, Michigan, will close, along with a separate powertrain facility in Ontario and metal centres in Lansing and Pittsburgh.

Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Michigan, and Portland, Oregon. One other site will to be announced later.

The company said it would take a “significant” restructuring charge in conjunction with the changes and any related early retirement programme. Details of those charges would be released later, GM said.

Any early retirement programme would require an agreement with its unions, which GM said it hopes to reach soon.

Wagoner said last month the carmaker would announce plant closures by the end of this year to get its capacity in line with US demand. GM plants currently run at 85% 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.

GM has been crippled by high labour, 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 carmakers led by Toyota Motor Corp.

The carmaker 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 US Securities and Exchange Commission for accounting errors.

Last week, after the carmaker’s shares fell to their lowest level since 1987, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.

GM is not the only US automaker faced with the need to cut costs.

Last week, Ford 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 said the cuts will be made in part through attrition and elimination of some agency and contract positions.

The plans were outlined on 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.