UPDATE 3-GM cuts hundreds of salaried employees


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By Jui Chakravorty

DETROIT, March 28 (Reuters) - General Motors Corp. , cut several hundred salaried jobs on Tuesday in its initial effort to reduce its U.S. white-collar work force by about 2,500 this year, as it tries to stem billions of dollars in losses by lowering costs.

The first batch of cuts, just under 500, were announced at 30 locations, according to a GM spokesman. The affected employees were asked to leave the company immediately.

One employee, who worked as an engineer at GM for 19 years, said he was uncertain about his future. "I don't know where I'll go from here," he said, leaving the GM Technical Center in Warren, about 20 miles north of Detroit.

The engineer, who asked he not be named, said some workers with company vehicles were asked to return them immediately while others were allowed to keep them for a month.

He also said he was given a severance package that included compensation for about a year.

Those losing their jobs will receive compensation and benefits for a set period of time, depending on their length of service, GM spokesman Robert Herta said.

The latest job cuts were first announced last November, when the struggling automaker said it would let go of 7 percent of its 36,000 white-collar U.S. employees this year.


GM lost $10.6 billion in 2005 as it faced high labor and commodities costs, loss of U.S. market share to foreign rivals and sluggish sales of sport-utility vehicles -- typically its largest profit generators.

"The job cuts will ultimately generate considerable cost savings if GM is smart enough to fire the right people and keep the right ones," Burnham Securities analyst David Healy said.

Healy also said GM can probably save at least $100,000 a year per employee in salary and other overhead costs. "There will be some upfront costs with buyouts and severance packages, but there will be big savings in the long term."

The cuts, part of GM's sweeping restructuring aimed at stemming losses, come a week after it reached a deal with the United Auto Workers union to offer early retirement to more than 100,000 hourly workers as part of a plan to eliminate 30,000 jobs and close 12 plants through 2008.

"All these cuts, buyouts, restatements, losses, weak sales -- it's very hard to read all this and figure out what the bigger picture is," Argus Research analyst Kevin Tynan said. "It's hard to contemplate the idea that the company will go from all this to profitable and prosperous."

GM said it will offer the laid-off employees placement assistance to find jobs outside the company.

GM shares rose 3 cents to $22.96 in Tuesday trade on the New York Stock Exchange.



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