Corp. begins trimming its salaried payroll today, part of a larger reduction in its white-collar ranks of 3,400 people due by May 1.
The U.S. salaried cuts got under way with 160 firings in the manufacturing engineering unit at GM’s technical center in Warren, MI.
The majority of the planned 3,400 job reductions will be through involuntary separations, GM spokesman Tom Wilkinson says.
“It is a very difficult, necessary part of our restructuring,” he says.
Depending on length of service, employees receive a severance package of up to six months of their base salary, as well as components of GM’s benefits package. They also get up to three months of employment placement assistance outside the auto maker.
GM faces a government-mandated deadline to restructure its hourly and salaried workforce by March 31.
Although President Obama’s auto industry task force has softened on the deadline recently, a significant adjustment in the auto maker’s labor costs must be achieved or GM may not receive the estimated $30 billion total in taxpayer loans and credit it may need to survive the sales downturn. GM already has drawn $13.4 billion in taxpayer loans.
Meanwhile, the auto maker expects to learn shortly after midnight tonight how many of its 62,000 hourly employees have elected to take a buyout or early retirement offer.
“The idea is to move their hourly wage levels down from they are now to the lower levels they negotiated for new hires,” says Tom Spillane, partner and bankruptcy expert with the automotive unit of Detroit-based law firm Foley and Lardner LLP.
The auto maker won a concession from the United Auto Workers union in 2007 to operate a 2-tier pay scale. But with sales levels reaching their lowest levels in more than two decades, it’s been difficult to hire in new employees at the lower wage rate.
GM wants to trim its hourly workforce from 62,403 people in 2008 to 46,600 by 2012. GM has not stated publicly its job-reduction goal for the latest attrition program targeting its UAW members but says the program probably would be most attractive to the roughly 22,000 workers currently eligible for early retirement.
The auto maker expects to release a final count of the number of blue-collar employees accepting the deal by Thursday.
GM also is planning to cut 26,000 jobs at overseas operations, with an eye on reducing its entire global workforce this year by 47,000 employees. In the U.S., according to the viability plan the auto maker submitted to the U.S. Treasury, it wants to cut its total employment rolls from an estimated 92,000 people in 2008 to 72,550 in 2012.
The restructuring plan also includes closing 14 plants by 2012; trimming GM’s dealer count by 1,546 over four years and converting two-thirds of its public debt to equity this year. In addition, GM has pledged to close or sell as soon as possible its Saturn, Saab and Hummer brands to bring its lineup down to four core divisions: Chevrolet, Cadillac, Buick and GMC.