Next step on GM affair

[Alejandro Valle Baeza <valle@xxxxxxxxxxxxxxxx>]

 Do you remember GM bonds downgrading? Here next step..


AP
GM Plans to Cut 25,000 U.S. Jobs by 2008
Tuesday June 7, 8:23 pm ET
By John Porretto, AP Auto Writer

General Motors Plans to Eliminate 25,000 Manufacturing Jobs in U.S. by
2008, Close Plants

WILMINGTON, Del. (AP) -- General Motors Corp. plans to close plants and
eliminate 25,000 manufacturing jobs in the United States by 2008 in an
attempt to restore profitability at the world's largest automaker, its
chairman said Tuesday as he fended off calls for his resignation.

Chairman and Chief Executive Rick Wagoner told shareholders at GM's 97th
annual meeting in Delaware that the capacity and job cuts should
generate annual savings of roughly $2.5 billion. About one out of six
jobs in the United States will be eliminated.

The United Auto Workers union responded that GM's ability to make the
cuts will depend on worker attrition rates and its contract negotiations
with the union. GM's UAW contract expires in 2007.

"The UAW is not convinced that GM can simply shrink its way out of its
current problems. What's needed is an intense focus on rebuilding GM's
U.S. market share, and the way to get there is by offering the right
product mix of vehicles with world-class design and quality," said UAW
Vice President Richard Shoemaker, who directs negotiations with GM.

Wagoner revealed the cutbacks as he laid out a strategy to invigorate
GM's North American operations, its biggest and most troubled, amid
lackluster sales of its highly profitable trucks and sport utility
vehicles, which have been hurt by high fuel prices.

GM posted a $1.1 billion loss in the first quarter and its U.S. market
share has fallen to 25.4 percent from 27 percent a year ago, as
customers increasingly are choosing models from Toyota Motor Corp.,
Nissan Motor Co. and other Asian automakers.

The cuts would be on top of earlier reductions that pared GM's U.S.
workforce from 177,000 hourly and salaried employees at the end of 2000
to 150,000 at the end of last year, according to figures provided by GM.

"Let me say up front that our absolute top priority is to get our
largest business unit back to profitability as soon as possible," said
Wagoner, who added that with $20 billion in cash and short-term
investments, GM is in no danger of going out of business anytime soon.

"But if we don't fundamentally get at these structural issues -- whether
it's gee-whiz, exciting products, or the right distribution, or a solid
cost structure in every element of business -- the risk of continually
being weakened over time is real," he said.

Wagoner wouldn't say which plants are in danger of being closed, but
David Cole, chairman of the Center for Automotive Research in Ann Arbor,
Mich., said the most likely targets are several older plants. Those
include facilities in Janesville, Wis.; Doraville, Ga.; Oklahoma City
and Pontiac, Mich., he said. The Janesville plant was built in 1919 and
the Doraville plant was built in 1947. The other two plants were built
in the 1970s.

Cole said GM probably won't close plants that have recently undergone
costly renovations, such as the plant in Lordstown, Ohio, that recently
got $1 billion worth of upgrades.

Disgruntled shareholders, who saw the value of their shares fall to a
10-year low in April, gave Wagoner an earful on Tuesday.

"This company is sick," said James Dollinger, a Buick salesman from
Flint, Mich., who angrily told Wagoner he should resign.

Fellow shareholder John Lauve compared the GM leadership to officers
aboard the Titanic as it headed for an iceberg. "The Titanic sank
because the directors ignored the warnings," said Lauve, who criticized
everything from gas gauges in GM vehicles to the company's health-care
cards. "We need to excel at the basics."

Fending off such criticism, Wagoner outlined four priorities: increasing
spending on new cars and trucks; clarifying the role of each of GM's
eight brands; intensifying efforts to reduce costs and improve quality;
and continuing to search for ways to reduce skyrocketing health-care
expenses.

He noted that health-care expenses add $1,500 to the cost of each GM
vehicle. This puts GM at a "significant disadvantage versus
foreign-based competitors," Wagoner said, echoing comments made by the
Standard and Poor's and Fitch ratings services after both reduced the
company's bond rating to "junk" status last month.

Wagoner described as intense the status of ongoing negotiations with the
United Auto Workers and other unions on ways to significantly reduce
GM's health-care costs. GM's health-care tab for its 1.1 million current
and former workers and their families is more than $5 billion a year and
rising.

"We have not reached an agreement at this time, and to be honest, I'm
not 100 percent that we will," said Wagoner, the CEO since 2000 and
chairman since 2003.

To date, the UAW has indicated it won't reopen its contract, which
expires in 2007, and agree to pick up a larger share of soaring
health-care costs. Messages left Tuesday with the UAW were not returned.

Wagoner said another part of the company's strategy is to make GM's
eight brands more distinct from each other. Chevrolet and Cadillac will
continue to have full vehicle lineups, he said, but the company's other
six brands -- GMC, Pontiac, Buick, Saturn, Saab and Hummer -- will be
more tightly focused on niche markets.

"In some cases, such as Pontiac and Buick, it will mean fewer but
stronger entries in the future," Wagoner said.

Wagoner said the company also plans to put less emphasis on incentives
and focus more effort on selling GM vehicles in top markets like New
York, Miami and Los Angeles.

General Motors shares rose 31 cents, or 1 percent, to close at $30.73 on
the New York Stock Exchange.

That is near the $31 a share offer made by billionaire investor Kirk
Kerkorian for 28 million GM shares. Kerkorian's offer expired Tuesday; a
spokeswoman for Kerkorian's investment firm, Tracinda Corp., said the
results would be announced Wednesday.

Wagoner said it was vital for the company to cut costs by improving
efficiency at its manufacturing plants. He said plant closings and
idlings in recent months will reduce assembly capacity in North America
from 6 million vehicles in 2002 to 5 million by the end of this year.

According to the Harbour Report, an annual productivity survey released
last week, GM's 30 North American plants operated at an average of 85
percent of their capacity in 2004, compared to an average of 107 percent
for Toyota's six North American plants.

GM already shut a factory in Linden, N.J., in April and a factory in
Baltimore in May, affecting about 2,000 employees.

AP Auto Writer Dee-Ann Durbin in Detroit and Delaware correspondent
Randall Chase contributed to this report.

On the Net,

General Motors Corp.: http://www.gm.com