More jobs to be cut at GM, CEO’s report says

 

 

October 8, 2009

 

More jobs to be cut at GM, CEO’s report says

 

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

Three months into its life after bankruptcy, General Motors Co. has about 10,500 more U.S. workers than called for by year’s end under its previously stated turnaround plan.

GM said Wednesday it has cut its U.S. hourly workforce by 21% and salaried ranks by 18.2% so far this year, according to a progress report by CEO Fritz Henderson.

Most of the extra positions are held by hourly workers and, given GM’s recent plans to add shifts at assembly plants, it was unclear how many more positions will be cut.

"We need to make additional reductions," said Tom Wilkinson, a GM spokesman.

Overall, Henderson said, GM has made progress but must keep its foot on the gas.

He announced that Mark LaNeve, the company’s top U.S. sales executive, will leave the company, but declined comment on speculation that Chief Financial Officer Ray Young also will depart. "Ray’s our CFO," he said. "I read the rumors like you do."

GM said later that Susan Docherty, head of Buick and GMC, would succeed LaNeve.

GM is focusing on the positive signs

General Motors Co. is working to get as much of the company’s restructuring completed by year’s end as possible, Henderson said Wednesday.

"We are knocking some of these things off, and we are staying focused on getting the rest of these matters behind us by the end of the year," Henderson said during a conference call with industry analysts and reporters.

He outlined the company’s 90-day performance, touting new vehicle launches that were beating company expectations. The Chevrolet Equinox, for example, saw September sales that were 94% better than a year ago. GM’s new marketing campaign — "May the Best Car Win" — is helping generate interest.

Industry analyst Aaron Bragman of IHS Global Insight praised GM’s progress so far given the economic situation. "I was actually fairly impressed with the fact that they are moving as quickly as they are," he said.

GM is still undergoing sweeping restructuring, which included a 40-day trip through bankruptcy. It has reduced brands, models and dealerships.

The company announced the status of its workforce reductions so far this year:

GM’s hourly employment fell 21% to 49,200 workers as of Wednesday — about 9,200 short of the turnaround plan’s year-end goal.

Henderson said buyout and retirement packages "fell short of our expectations," but he noted the "good news" is that GM has added back some workers into production because of increased demand.

In recent weeks, GM has restored about 4,300 hourly jobs, adding shifts at plants in Lansing, Kansas City, Kan., Ft. Wayne, Ind., and Lordstown, Ohio.

It was unclear what GM has set as a new year-end hourly workforce goal.

"As we continue to close or place plants on standby capacity that we’ve identified, we will place employees on indefinite layoff," said Chris Lee, a GM spokesman.

UAW workers on layoff get about 75% of their gross pay through a combination of company supplemental pay and state unemployment for a maximum of two years, Lee said.

GM’s U.S. salaried workforce has dropped 18.2% to 24,300 as of Thursday, which is about 1,300 short of the turnaround plan’s year-end goal.

GM doesn’t expect to cut as many salaried workers as previously planned, in part because it needs more workers in its accounting department to prepare for the company to offer stock to the public next year.

At least 350 more white-collar workers will likely leave by year’s end, mostly through retirement.

The company reiterated that GM is continuing to prepare for the launch as a public company "as soon as practical."

The company is aiming to have its fresh-start accounting completed by March 31, which includes determining the fair value of GM’s assets and liabilities.

General Motors could benefit from bringing in new executives from outside the automaker, Henderson said.

"We have good people, but I think we would benefit from fresh perspectives," he said.

GM is working with Kenneth Feinberg, the federal salary czar overseeing executive pay at the companies that got government loans, to finalize compensation packages for GM executives.

"Prior to bringing people in from the outside, we need to be able to explain how we might pay them," Henderson said.

 

Contact TIM HIGGINS: 313-222-8784 or

thiggins@freepress.com

Additional Facts

Status report on GM plan

 

Since emerging from bankruptcy three months ago, General Motors Co. has been plugging away at its sweeping restructuring plan.

On Wednesday, GM Chief Executive Officer Fritz Henderson gave an update on important issues:

 

Inventory: Dealer stock is well below where GM expected. GM planned to end the year with 545,000 vehicles in inventory, or about a 90-day supply. It ended the third quarter with 424,000 vehicles, an 81-day supply. Status: Ahead of schedule.

 

Dealer reductions: GM’s U.S. dealer network has decreased by about 575 stores so far this year, about 200 short of its goal for 2009. Status: In progress.

 

Model reductions: GM has cut three nameplates to 45, the year’s goal. (GM’s eventual goal is have 34 nameplates.) Status: Done.

 

Hummer: GM had hoped to have Hummer sold by Sept. 30. The company now expects to have the deal complete by the end of the year, noting that further progress on agreements and necessary regulatory approvals required to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd. have been made. Status: Behind schedule.

 

Saab: No final deal yet, but GM says it expects to close the deal to sell to Koenigsegg Group AB by year’s end. Status: Pending.

 

Saturn: GM had hoped to sell the brand to Penske Automotive Group, but that deal fell apart last week. Now GM is working to close down the brand and dealerships by the end of next year. Status: Plan A failed.

 

 

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