NEW YORK – General Motors Corp. is planning to slash another 10,000 salaried jobs by May, saying the cuts are unavoidable with a government restructuring deadline looming and industry wide sales in one of the worst downturns in history.
The Detroit-based automaker said today it will reduce its total number of white-collar workers by 14 per cent to 63,000. About 3,400, or 12 per cent, of GM’s 29,500 salaried U.S. jobs will be eliminated and other jobs will be cut in other regions of the world depending on staffing levels and market conditions.
General Motors of Canada Ltd. is cutting its white-collar, salaried workforce by possibly hundreds of jobs and temporarily trimming pay of remaining staff as it desperately fights to stay alive during the industry’s current economic storm.
GM Canada’s Detroit parent, which is burning through billions of dollars in cash, announced the reductions of its global salaried workforce in efforts to slash costs and qualify for public financial aid from the U.S. and Canadian governments before deadlines next week.
GM’s cuts would work out to about to 340 jobs in GM’s current Canadian salaried workforce of about 2,400, but a spokesperson would not confirm the range of reductions.
“We will not announce a specific number relative to the impact on GM Canada but it is clear that our operations here will be affected in addition to previously announced salaried reductions associated with the closures of both the Oshawa Truck and Windsor Transmission facilities,” said Stew Low, director of communications for GM of Canada.
Low added in an e-mail to the Canadian Press that pay cuts that will be applied to most of the salaried employees who remain will be in addition “to significant reductions already announced to GM salaried benefits in Canada.”
“This is more difficult news for Ontario families,” Premier Dalton McGuinty said in London today.
“We will have a smaller auto industry in Ontario… (and) fight as hard as we can to maintain a share of that industry.”
In Canada, the federal and Ontario governments have said they’re willing to provide the equivalent of 20 per cent of what the U.S. government provides â€“ about C$4 billion â€“ to help subsidiaries of the Detroit Three automakers, although conditions are attached.
One of the conditions is that the automakers and employees represented by the Canadian Auto Workers union negotiate new, lower labour costs. The CAW has said it’s willing to talk and help the automakers survived but also advanced its own set of preconditions.
CAW president Ken Lewenza, whose union represents workers at the Canadian subsidiaries of General Motors, Ford (NYSE: F) and Chrysler, said that car dealers, bond holders, shareholders, executive wages and benefits all must take a hit along with unionized workers.
He added that GM’s salaried, non-union workers have already been affected and will undoubtedly feel additional pain.
““I don’t think we’ve had two consecutive days in a row where there hasn’t been bad news in the auto industry. But when you announce 10,000 job losses globally, there’s going to be an impact in Canada. It’s inevitable,” Lewenza said.
He added that “significant cuts” have already been made to GM’s salary groups in Canada and they are at “the bare minimum.”
In its plan to the U.S. Congress submitted late last year, GM said it would have to reduce both salaried and hourly positions so that the company could become viable for the long term.
The company said it plans to reduce its total U.S. work force from 96,537 people in 2008 to between 65,000 and 75,000 in 2012, but it did not specify how many of the surviving jobs would be salaried or hourly.
GM has dramatically downsized both its salaried and hourly work forces in recent years. Since 2000, GM’s salaried work force has shrunk by 33 per cent from its 2000 high of 44,000 people.
At the same time, the number of hourly workers has plunged by more than half â€“ to about 63,700 people at the end of last year from 133,000 in 2000.
Most of the cuts announced today are expected to take place by May 1.
The company’s statement said there would be no buyout or early retirement packages as GM had offered in the past, but laid-off employees will get severance pay, benefit contributions and other assistance.
GM spokesman Tom Wilkinson would not say exactly where the U.S. cuts would come, but he said the automaker will continue to staff areas such as electric vehicle development that it expects to be important going forward.
“The goal is to put our people in the areas that are critical to our future success,” Wilkinson said.
GM also said it will cut the pay of most of its salaried U.S. workers effective May 1. The pay cuts will be reevaluated at the end of the year, GM said.
The pay of U.S. executive employees will be cut by 10 per cent, while other salaried workers will see cuts of three per cent to seven per cent, GM said.
GM faces a Feb. 17 deadline to present a plan to the U.S. government showing the wounded automaker can become viable.
GM has received US$9.4 billion from the Treasury Department and expects to get $4 billion more, but the government can demand repayment March 31 if it determines the company can’t become viable.
The company is required to show the government it can achieve “positive net present value,” which means that the present value of a company’s expected net cash flows exceeds the initial investment in the company.
The loan terms also require bondholders to swap part of the company’s debt for equity. The UAW also must make concessions that will reduce labour costs to the level of Japanese automakers’ plants in the U.S.
GM’s plan also will include shuttering additional factories, according to people familiar with the plans.
GM has yet to announce its fourth-quarter and full-year 2008 financial results, but analysts expect the automaker’s losses to total in the billions of dollars for both periods.
GM reported a $2.5 billion loss in the third quarter alone and said it burned through $6.9 billion in cash during that period, adding to urgent warnings that it would run out of cash without government aid.
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