GM Job Cuts Are Deepest Since 1991

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The New York Sun

General Motors, weighed down by its biggest losses in more than a decade, will close 12 North American operations and purge 30,000 jobs in its deepest round of cuts since 1991.


The chief executive, Rick Wagoner, said yesterday that the world’s largest automaker will idle five assembly plants, four parts factories, and three non-manufacturing complexes. Among them is a Saturn plant opened 15 years ago as an answer to the small-car threat from Asia. The moves will lower GM’s $41 billion annual operations expenses by $7 billion by the end of next year, Mr. Wagoner said.


“This is the bad medicine they need to swallow to get back to some form of profitability,” a senior analyst with Global Insight, Rebecca Lindland, said.


The job cuts are 20% greater than what Mr. Wagoner promised in June. Since then, GM’s North American losses have ballooned to $4.8 billion for the first three quarters.


Competition from rivals such as Toyota has pushed the automaker’s American market share to 80-year lows. Ratings companies responded by reducing the automaker’s debt to junk.


In addition to one of the Saturn plants in Spring Hill, Tenn., GM will close assembly plants in Doraville, Ga.; Lansing, Mich.; Oklahoma City; and Oshawa, Ontario. The automaker will shut down engine plants in St. Catharines, Ontario, and Flint, Mich. GM will also reduce shifts at assembly plants in Moraine, Ohio, and a second car plant in Oshawa.


Most of the closings and shift reductions will be complete by next year. The Georgia and Oshawa closings will come by the end of 2008. Yesterday’s announcement marked the biggest shrinking of GM since December 18, 1991, when the company said it intended to close 21 assembly and manufacturing operations and eliminate 74,000 jobs.


The closings will reduce GM’s North America assembly capacity to about 4.2 million cars and trucks by the end of 2008, a 30% or 2 million-unit reduction since 2002. GM will have flexibility to add production if there is market demand, Mr. Wagoner said.


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