February 10, 2009 - General Motors, Detroit MI

GM to Slash 10,000 Management Jobs

General Motors told its white-collar workforce this morning that it will slash about 10,000 management jobs worldwide and make temporary cuts of 10 percent to their pay.

The job reductions will trim GM's salaried labor force to 63,000 from 73,000 worldwide. In the United States, about 3,400 of GM' s 29,500 salaried employees will be laid off.

Many of the reductions will take place by May 1. Starting then, the base pay of higher-level executive employees will be lowered by 10 percent, while other salaried employees will face cuts of between 3 percent and 7 percent. In December, GM told Congress that by 2012 the company aimed to reduce its overall workforce -- 96,537 salaried and hourly blue-collar workers -- by at least 22 percent.

In an email to U.S. executives obtained by the Washington Post, GM chief executive Rick Wagoner said, "These are extremely challenging times for the global auto industry and for General Motors -- certainly the toughest I have seen in my 30-plus years with the company. In response, we are taking a number of necessary actions to position the company for long-term viability and success. Our viability plan is very aggressive and requires significant sacrifices -- from all GM stakeholders, including management, employees, unions, suppliers, dealers, investors and debt holders."

"We see the plan we delivered on December 2nd as the overall blueprint for our restructuring," said GM spokesman Greg Martin. "What we have been doing the last several weeks is using that blueprint and tying it to the loan terms" established under a federal auto industry bailout program.

GM and Chrysler are rushing to meet stakeholders and put the final touches on viability plans scheduled to be submitted to Congress on Feb. 17. Under the terms of their $13.4 billion in federal loans, the two Detroit automakers must cut costs and win concessions from bondholders, labor unions and dealers by that date. They need to prove they can pay back the loans as well as build vehicles that can meet the nation's escalating federal fuel-efficiency standards.

In January, U.S. auto sales dipped to their lowest level in more than two decades. Now executives are crunching numbers, trying to lower their break-even point.

"Chrysler took out $3 billion of fixed costs last year, and will achieve more this year as we take every step necessary to be viable," said Chrysler spokesman Stuart Schorr.

Last week, both companies offered another round of incentives to try to encourage the blue-collar factory workers to quit voluntarily.

"The bottom line is that they will be replaced at a lower wage rate that will help us become more competitive overall," GM spokesman Tony Sapienza said.

Meetings with the United Auto Workers are continuing this week to get wages in line with foreign competitors. Though Ford won't be requesting federal loans, it does expect to benefit from any union concessions. After union leaders agreed to end GM and Chrysler's jobs bank programs, which paid workers at idle plants, it did the same for Ford.

"We are talking to the UAW," said Susan M. Cischke, Ford's group vice president of sustainability, environment and safety engineering. "We want to make sure we aren't left on the sidelines."

At the National Automotive Dealers Association's annual convention in New Orleans last month, GM discussed plans to consolidate and reduce the number of its dealers by about 400 a year through 2012.

In recent months, suppliers have also clamored for their share of the government bailout. GM is in talks with its main parts supplier, Delphi, to acquire some of its plants, said people familiar with the matter. Delphi does not qualify for federal loans as a stand-alone company, but if GM took control of some of Delphi's operations, the automaker could channel federal loans to its beleaguered supplier.

Meanwhile, unsold cars and trucks have been piling up at dealerships and assembly plants. At the end of January, the industry had built up an inventory of 2.93 million cars and trucks -- enough to last 116 days at current sales levels, according to Autodata.

Chrysler announced yesterday that it would idle four plants this week. The Detroit plant that makes the Dodge Viper, a unit that Chrysler is trying to sell, has been closed since December.

The announcement of the latest layoffs comes a day after GM lost one of its top executives.

Bob Lutz, General Motor's plain-spoken product chief and vice chairman, announced his retirement yesterday, signaling changes not only for GM, but also for the domestic auto industry.

Lutz was one of the best-known executives in Detroit. He pushed many of the industry's innovative designs, from the Dodge Viper to the Ford Explorer, in a 46-year career that included stops at all three of the American auto giants.

He was never shy with his opinions. He championed horsepower, derided hybrid cars and only last year called global warming "a total crock." Yet he overhauled GM's vehicle line-up, improving fuel economy and quality. In recent years, he's been the chief salesman for the Chevrolet Volt, a plug-in electric car.

"When I do retire at the end of this year, the Volt program will be well on its way to launch and I'll feel the same sense of pride and accomplishment that the entire Volt team will feel when the first ones are silently rolling off the assembly line," Lutz, 76, wrote in a GM blog post titled, "You're Not Rid of Me Yet."

Lutz was a self-proclaimed "car guy" in a sea of finance-trained executives. He is leaving at a time when it seems likely that lawmakers and regulators soon will have a large say in the kind of cars that will be built in Detroit.

Despite the industry's struggles, Lutz recently expressed satisfaction in the lineup of cars and trucks headed to showrooms in the coming months.

"You remember two years ago when we showed the Volt?" he asked, standing on the floor of the Detroit auto show last month. "Everyone said 'Ha, ha, ha.' What do these guys know? Everybody knows that lithium ion batteries won't work in cars. And now everyone is introducing lithium ion battery concept cars and production cars."

Original Story - Washington Post