By Mike Caggeso
Associate Editor
Money Morning
Under the gun to return to profits, General Motors Corp. (GM) announced dramatic job cuts and dialed back pay to its white-collar workforce.
The largest U.S. automaker will cut its global salaried workforce from 73,000 to 63,000 by the end of 2009. GM will eliminate 3,400 of its 29,500 U.S. jobs by May 1, and its U.S. executives will see a pay cut of 10%. Many other salaried employees will take a temporary 3% to 7% pay cut.
"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in a release on its Web site.
Nearly every day it seems, GM's turnaround efforts have been making gigantic waves.
- GM is talking with parts maker and supplier Delphi Corp. (DPHIQ) - which was spun off from GM 10 years ago - about buying back assets, hoping to shore up its supply chain.
- GM started offering buyouts to more than 60,000 union workers and continued talks with the United Auto Workers about trimming benefits.
- GM and Ford Motor Co. (F) said U.S. sales plummeted over 40% in January, dragging the world's biggest auto market toward the worst month since 1982.
- Last month, GM said it would eliminate shifts in the second quarter at Ohio and Michigan plants, a move that will shed about 2,000 jobs. The carmaker will also cut production at 13 other U.S. and Canadian plants, Bloomberg reported.
- Also last month, GM officially lost the crown as world's largest automaker to Toyota Motor Corp. (ADR:TM) after a 77-year run, Reuters reported. Global vehicle sales for GM dropped 11% in 2008 to 8.35 million. Toyota's global sales slipped 4% and to 8.87 million units.
GM and Chrysler LLC have until Feb. 17 demonstrate their viability to the U.S. government, or risk being forced into bankruptcy.
GM has received $9.4 billion and expects to get $4 billion more, while Chrysler has received $4 billion and is hoping to get another $3 billion. But in order to secure these funds, they must first prove they are able to repay the federal loans that are currently keeping the companies afloat in the worst U.S. auto sales climate in 26 years.
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