General Motors Expects Cuts to Save $15 Billion
After Weeks of Speculation About the solvency of General Motors Corp., CEO Rick Wagoner announces aggressive cost-cutting measures expected to generate $15 billion in savings through 2009. Most of the initiatives are aimed at GM's truck-focused North American operations, which have been decimated by a decisive consumer shift toward fuel-efficient cars and cross/utility vehicles. In a telling sign
After Weeks of Speculation About the solvency of General Motors Corp., CEO Rick Wagoner announces aggressive cost-cutting measures expected to generate $15 billion in savings through 2009.
Most of the initiatives are aimed at GM's truck-focused North American operations, which have been decimated by a decisive consumer shift toward fuel-efficient cars and cross/utility vehicles.
In a telling sign that the market shift is “structural and not cyclical,” Wagoner says GM will reduce by 300,000 units its truck and related stamping and engine capacity by the end of 2009. Half of these reductions represent an acceleration of previously announced actions.
GM also announces:
A 20% reduction in U.S. and Canadian salaried employee costs, expected to be achieved through early retirements and other separation programs.
Elimination, as of Jan. 1, 2009, of health-care coverage for U.S. salaried retirees who reach the age of 65, although Wagoner says the auto maker “will significantly increase pension payments” for retires and their surviving spouses to offset the change.
A pay freeze through 2009 for salaried employees and executives.
Elimination of annual discretionary cash bonuses for executives in 2008.
Deferment until 2010 of a $1.7 billion cash payment, previously due in 2008 and 2009, to the new employee health-care fund administered by the United Auto Workers union.
Restriction of global-engineering expenses this year and next, to 2006-2007 levels.
GM reiterates it will limit spending on its next-generation fullsize truck and SUV programs, as well as V-8 engines.
To take the edge off the announcements, several future product programs are confirmed. They include production versions of the Buick Invicta concept, due next spring; the Cadillac CTS concept coupe, due in 2009; and the Cadillac CTS Sport Wagon concept, due next spring.
In addition, Wagoner confirms the next-generation Chevy Equinox cross/utility vehicle will come to market in May, 2009 with a new, more fuel-efficient 4-cyl. engine.
Read more about:
2008About the Author
You May Also Like
