General Motors Corp. (GM, Detroit, MI) announced that it will eliminate 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 company to start making money again after absorbing nearly $4 billion in losses so far this year. The announcement represents 5,000 more job cuts than the 25,000 that had previously been indicated. The 30,000 job cuts represent about nine percent of GM's global work force of about 325,000 people.
"The decisions we are announcing were very difficult to reach because of their impact on our employees and the communities where we live and work," stated GM Chairman and CEO Rick Wagoner. "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 will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. 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. Cuts are expected to come through attrition and early retirement programs. The company also reported that it would take a "significant" restructuring charge in conjunction with the changes and any related early retirement program. Details of those charges will be released later.
