GM slashing 30,000 jobs, closing plants

updated 1:43 p.m. ET Nov. 21, 2005

DETROIT - General Motors Corp. 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 world’s biggest automaker to start making money again after absorbing nearly $4 billion in losses so far this year.

The announcement Monday by Rick Wagoner, GM’s chairman and CEO, represents 5,000 more job cuts than the 25,000 that the automaker had previously indicated it planned to cut. United Auto Workers union leaders called the cuts “extremely disappointing, unfair and unfortunate.”

The 30,000 job cuts represent about 9 percent of GM’s global work force of about 325,000 people.

“The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work,” Wagoner told employees. “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.

GM said assembly plants will close in Oklahoma City, Lansing, Mich., Doraville, Ga., and Ontario, Canada. GM also listed Spring Hill, Tenn., as a plant closing even though one production line will remain open there. A shift also will be removed at a plant in Moraine, Ohio.

“Personally, I’ve been speculating this would come down the pike for a while, and I’ve been trying to look for work elsewhere,” said Bob Tyrrell, 45, who has worked the second shift at the Oklahoma City plant since 1979. “I didn’t think it would be this quick or this drastic.”

Mike O’Rourke, president of United Auto Workers Local 1853 in Spring Hill, said GM leaders need to change approaches to be successful. “They need to design cars that sell,” O’Rourke said.

An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.

Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore. One other site will to be announced later.

GM said 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 said it would take a “significant” restructuring charge in conjunction with the changes and any related early retirement program. Details of those charges would be released later, GM said.

Any early retirement program would require an agreement with its unions, which GM said it hopes to reach soon.

The United Auto Workers said workers will be protected by the union’s job security agreements, which ensure they get pay and benefits even while they’re laid off. The union also said GM’s actions will make contract negotiations in 2007 much more difficult.

“Today’s action by General Motors is not only extremely disappointing, unfair and unfortunate, it is devastating to many thousands of workers, their families and communities,” UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement.

“Workers have no control over GM’s capital investment, product development, design, marketing and advertising decisions. But, unfortunately, it is workers, their families and our communities that are being forced to suffer because of the failures of others.”

Wagoner said last month the automaker would announce plant closures by the end of this year to get its capacity in line with U.S. demand. GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals. The plant closings aren’t expected to be final until GM’s current contract with the United Auto Workers expires in 2007.

GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity. Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp. GM lost nearly $4 billion in the first nine months of the year.

MORE FROM AUTOS

Autos Section Front

GM reports $1.2 billion third-quarter loss 37 percent of U.S. Saab dealerships to close Ford: New police cruiser to replace Crown Vic Automakers turn to safety to sell cars Texan drives $1 million car into marshes Dirtiest vehicles on America’s highways GM needs new Buick, Chevy entries to be hits IntelliDrive program blends technology, safety Chinese automaker aims to compete globally CEO lays out ambitious Chrysler road map Autos Section Front   Add Autos headlines to your news reader: