DETROIT — General Motors said Tuesday it will lay off salaried workers, cut truck production, suspend its dividend and borrow $2 billion to $3 billion to weather a severe downturn in the U.S. market.
GM said the moves will raise $15 billion to help cover losses and turn around its North American operations, including $10 billion from internal cost-cutting and $5 billion from selling some assets and borrowing against others.
“In short, our plan is not a plan to survive. It is a plan to win,” GM chairman and chief executive Rick Wagoner said in a broadcast to employees.
GM’s shares fell as much as 6 percent to a 54-year low of $8.81, then rebounded to close at $9.84, up 46 cents, or 4.9 percent, from Monday’s close.
Chief operating officer Fritz Henderson said GM wants to reduce its total salaried costs in the U.S. and Canada by more than 20 percent.
A large chunk of the reduction, he said, would come from cutting health- care benefits for salaried retirees over age 65. Those people would get a pension increase from the company’s overfunded pension fund to help compensate for Medicare and supplemental insurance, the company said.
Several thousand jobs will be cut through normal attrition and retirements and through early-retirement and buyout offers, Henderson said. The company could resort to involuntary layoffs but does not want to, he said.
Wagoner said the company has not made early-retirement offers to salaried workers for three or four years, and he would expect good acceptance of new offers, helping GM reach its cost-cutting goal.
“I suspect the vast majority of the reductions will be accomplished through initiatives which do not require involuntary actions,” Wagoner said. “Let’s see how it plays out.”
GM has 40,000 salaried employees in North America.
Henderson said the company intends to reduce its truck-production capacity by 300,000 units, 150,000 more than it announced at its annual meeting in June.
The company will speed up previously announced closures of some truck and sport-utility-vehicle factories.
GM said last month it would close plants in Janesville, Wis.; Oshawa, Ontario; Toluca, Mexico; and Moraine, Ohio.
General Motors’ rebuilt engine
General Motors said Tuesday it plans to raise about $15 billion by cutting costs, selling some assets and borrowing against others. A breakdown:
•Reducing the number of trucks manufactured, cutting marketing and sales budgets, and freezing engineering budgets.
•Continuing workforce reduction, killing raises for this year and next, and suspending executive bonuses this year.
•Selling unspecified vehicle lines, probably starting with Hummer.
•Cutting health-care benefits to retirees 65 and older, when they are eligible for Medicare, and increasing pension payments to partially cover the increased expenses.
•Delaying development of its next-generation truck and sport-utility vehicle lines.
The Associated Press
