From Detroit Free Press
DETROIT — General Motors Corp.’s efforts to accelerate cuts to its salaried workforce helped the company’s stock rebound on Monday, a day when GM was one of the few automotive stocks to increase.
GM is trying to cut up to 2,000 salaried positions in the first half of the year through early-retirement offers, said an official who is familiar with the situation. The move is an apparent acceleration of a plan already disclosed by the automaker.
In January, GM Chairman and CEO Rick Wagoner told the Detroit Free Press in an interview that the company plans to shrink its workforce through normal attrition by about 7 percent this year, including about 1,000 salaried positions.
News that GM had begun making early-retirement offers apparently bolstered investors’ confidence that the automaker acting quickly to stay on top of the situation.
GM spokesman Robert Herta would not release specific targets for salaried job cuts, but said they would be in line with past years. The company’s salaried ranks have fallen by 1,000 or 2,000 workers in each of the last few years.
“We believe what we are doing is appropriate for the business,” Herta said. “As we go forward we will continue to evaluate how we will further align our workforce with business needs.”
Herta said GM has made several difficult decisions affecting salaried workers and executives recently, including canceling merit increases and reducing the company contribution to an employee stock purchase program from 60 cents on the dollar to 20 cents, effective April 1.
On Monday, GM shares gained $1.07, or 3.7 percent to $29.69. Other automotive stocks, including DaimlerChrysler AG, Toyota Motor Corp. and most suppliers, were down for the day.
Among the buyers: Wagoner, who bought 50,000 shares for almost $1.5 million, according to a filing with the Securities and Exchange Commission.
“This is a personal investment decision for me and it demonstrates my confidence in the long-term prospects for General Motors,” Wagoner said in a statement.
GM share had plunged almost 14 percent last Wednesday, when GM cuts its outlook for the year and warned that it would likely post a substantial loss in the first quarter. The stock fell a total of 17.1 percent for the week.
Job cuts at GM are nothing new. Without resorting to a sudden and painful North American restructuring plan, like the one to take 12,000 jobs out of its money-losing European business, GM has quietly and efficiently cut 45,000 jobs from its U.S. workforce alone from 2000 through 2004.
In 2001 and 2002, the Chrysler Group and Ford Motor Co. announced sweeping plans to revive their businesses, that included aggressive product plans and tens of thousands of job cuts.
With 324,000 employees, GM now has fewer workers worldwide than Ford, which also owns the Hertz rental-car business, and lists “more than 324,000” employees.
GM came into the year expecting to break even in the first quarter and earn $4 to $5 a share, excluding one-time items, for full year.
Last Wednesday, GM said it would likely lose $1.50 a share in the first quarter, excluding one-time items and earn only $1 to $2 a share for the year.
Copyright 2005 Detroit Free Press. All Rights Reserved.
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