GM To Close 9 Plants, Cut 30K Jobs

General Motors logo - factory worker graphic
AP
General Motors Corp. announced plans Monday to cut 30,000 manufacturing jobs and close nine North American assembly, stamping and powertrain facilities by 2008 as part of an effort to get production in line with demand.

Rick Wagoner, chairman and CEO of the world's largest automaker, announced the closures during a speech to employees from GM's Detroit headquarters before the financial markets opened. Wagoner said GM also will close three service and parts operations facilities.

"The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," Wagoner said. "But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible."

The assembly plants are in Oklahoma City, Doraville, Ga., the Lansing Craft Centre in Michigan, and Oshawa, Ontario. One shift at the Saturn plant in Spring Hill, Tenn. is being eliminated.

GM has been losing billions of dollars along with share in the key U.S. market.

It said the plan is to achieve $7 billion in cost reductions on a running rate basis by the end of 2006 — $1 billion above its previously indicated target. The number of job cuts also was above earlier estimates. GM said earlier this year it planned to cut 25,000 jobs by 2008, mostly through attrition.

Wagoner said last month that the automaker would announce plant closures by the end of this year in order to get its capacity in line with U.S. demand. GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals.

GM could still have a great future, but "you've got to shrink to grow," David Cole of the Center for Automotive Research told CBS Radio News. "You've got to get to a base that's a sustainable base, and they are not there right now."

The plant closings aren't expected to be final until GM's current contract with the United Auto Workers expires in 2007.

Cole says the only way the UAW itself can survive is to be a "collaborative partner" with the automakers.

Wagoner also announced earlier this year that GM plans to cut 25,000 jobs by 2008, mostly through attrition.

GM has been crippled by falling U.S. market share, high labor and health care costs and other issues. It lost nearly $4 billion in the first nine months of this year.

The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees. GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors.

Last week, after the automaker's shares fell to their lowest level in 18 years, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.

"I'd like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to employees which was posted on an internal Web site.