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GM rushes to wrap revival plan

April 25, 2009

GM rushes to wrap revival plan

Salaried time-off policy means less pay


As General Motors races to impress the White House with a more aggressive turnaround plan, the Detroit automaker is hustling to put the final pieces in place before the end of the month.

On Friday, GM told U.S. workers it was implementing a new mandatory time-off policy that would allow the company to send salaried employees home for weeks at a time with a 25% pay cut.

GM also worked to pat down speculation it would eliminate the storied Pontiac division. "Information will be released as any decisions are finalized," the company said.

The automaker is rushing to put out a bond exchange early next week — perhaps Monday — as part of its effort to restructure about $28 billion in unsecured debt. In the exchange, GM would offer debt holders equity in return for forgiving part of the debt they’re owed.

Part of that effort is expected to include details about GM’s new business plan, a response to President Barack Obama call for a more-aggressive viability plan, a person familiar with the work said.

GM has scheduled a Monday morning meeting with members of Michigan’s congressional delegation.

GM — which has so far received $15.4 billion in federal funds, including $2 billion Friday — has until the end of May to come up with a new turnaround plan and restructure its debt or the Obama administration could call the loans keeping GM afloat.

Asked about the efforts, Ray Young, GM chief financial officer, said: "I’m not staying in the office late just to twiddle my fingers. We’re working away at it."

Last week, GM CEO Fritz Henderson said the new business plan would include additional job cuts and plant closures. Those job cuts could occur by June 1, a person familiar with the effort said on condition of anonymity because this person was not authorized to talk publicly.

GM details new policy

In a message to workers Friday, GM North America Human Resources Vice President Gay Tosch said the company is implementing a new mandatory time-off policy for salaried employees in an effort to take full advantage of its extended summer shutdown and save more money.

Under the new policy, going into effect Friday, GM leadership can schedule time off for salaried workers in one-week increments during which employees will receive reduced pay. Salaried employees placed on mandatory time-off will remain in active status and receive 75% of their current base salary.

On Thursday, GM confirmed it would idle 13 assembly plants, as well as associated stamping and powertrain plants, for up to nine weeks this summer in an effort to bring inventories in line with demand.

"We recognize that this situation will be difficult … Our goal is to enable the business to reduce costs while still providing salaried employees some level of compensation stability," Tosch said in a memo obtained by the Free Press.

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