GM to slash jobs, close more plants

Wagoner described as intense the status of ongoing negotiations with the United Auto Workers and other unions on ways to significantly reduce GM’s health-care costs. GM’s health-care tab for its 1.1 million current and former workers and their families is more than $5 billion a year and rising.

“We have not reached an agreement at this time, and to be honest, I’m not 100 percent that we will,” said Wagoner, the CEO since 2000 and chairman since 2003.

To date, the UAW has indicated it won’t reopen its contract, which expires in 2007, and agree to pick up a larger share of soaring health care.

Wagoner, who fended off calls for his resignation from shareholders, said the capacity and job cuts should generate annual savings of roughly $2.5 billion.

The cuts would be on top of earlier reductions that pared GM’s U.S. workforce from 177,000 hourly and salaried employees at the end of 2000 to 150,000 at the end of last year, according to figures provided by GM.

“Let me say up front that our absolute top priority is to get our largest business unit back to profitability as soon as possible,” said Wagoner, who added that with $20 billion in cash and short-term investments, GM is in no danger of going out of business anytime soon.

Wagoner wouldn’t say which plants are in danger of being closed, but David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said the most likely targets are several older plants. Those include facilities in Janesville, Wis.; Doraville, Ga.; Oklahoma City and Pontiac, Mich., he said. The Janesville plant was built in 1919 and the Doraville plant was built in 1947. The other two plants were built in the 1970s.

Cole said GM probably won’t close plants that have recently undergone costly renovations, such as the plant in Lordstown, Ohio, that recently got $1 billion worth of upgrades.

Disgruntled shareholders gave Wagoner an earful Tuesday.

“This company is sick,” said James Dollinger, a Buick salesman from Flint, Mich., who angrily told Wagoner he should resign.

Fellow shareholder John Lauve compared the GM leadership to officers aboard the Titanic as it headed for an iceberg. “The Titanic sank because the directors ignored the warnings,” said Lauve, who criticized everything from gas gauges in GM vehicles to the company’s health-care cards. “We need to excel at the basics.”
Wagoner said GM board members seem satisfied with the details of the proposed turnaround strategy and feel the best executives are in place to accomplish it.

“No one’s job security is forever, and that applies to me,” Wagoner said. “But I’m very confident we have the right plans and I have the full support of the board and frankly the full support of the key constituents in our company.”

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