CBNNews.com - General Motors Corp. is expected to announce Tuesday that several thousand salaried jobs will be eliminated and that the auto company will scale back truck production across the board.
The drastic move comes in response to falling U.S. sales and Wall Street's demands for more action to stem its losses, according to two people briefed on the plan The Associated Press reported.
GM Chairman and CEO Rick Wagoner is scheduled to discuss the changes at a news conference Tuesday morning.
Those briefed on the plan said GM will reduce its truck production to focus more on small cars, which are in high demand right now due to soaring gas prices.
Also on the chopping block are GM's factories that supply truck plants, such as those that make engines, transmissions and parts.
GM released no further details, but the beleaguered auto company will likely cut several thousand salaried job cuts. The salaried cuts will likely be a combination of buyouts and early-retirement offers and involuntary layoffs, one of the people said.
Even GM executives are no strangers to pay cuts. In 2006, Wagoner, Vice Chairman Bob Lutz and others voluntarily reduced their salaries.
Critics have said GM has too much fat in its middle management, despite their efforts to scale back white-collar employment in 2000 from 44,000 to 32,000 last year. Still, engineering, manufacturing and marketing costs are too high, the sources said.
GM also will detail plans to raise more cash to fund its restructuring.
More than a month ago, GM said it would be shutting down four truck and SUV plants and stepping up production of the smaller, more fuel-efficient cars that customers are demanding. It also announced production of a new car that could get 45 miles to the gallon. The car is slated to go on sale in 2010.
But the announcement didn't stop GM's shares from falling 54 cents, or 5.4 percent, to close at $9.38 Monday. The company's shares have hit a series of 50-year lows since July 2.
However, shares regained 18 cents in after-hours trading after GM's statement that it is taking actions "to align the business to current market conditions."
Source: The Associated Press