GM to cut thousands of jobs, save $15 billion under new restructuring plan

15 July 2008

Mumbai: General Motors Corporation, the world's largest automaker, is planning a major restructuring of business, including a 20 per cent reduction in salaried employees, amidst a 16 per cent fall in its US vehicle sales in the second quarter of the current year.

GM chief executive Rick Wagoner is slated to detail a major cost-cutting exercise, that will include widespread job cuts for white-collar workers, including engineers engaged in GM's next generation SUVs and pickup trucks, sources close to the development said.

GM plans to cut the number of salaried employees in the US and Canada in 2008, through normal attrition, early retirements, mutual separation programmes and other separation tools. In addition, GM will eliminate healthcare coverage for US salaried retirees over 65, effective 1 January 2009. Instead, they will be given a higher pension. There will also be no new base compensation increases for US and Canadian salaried employees for the remainder of 2008 and 2009.

For the company's top executive officers, the restructuring package represents a 75 to 84 per cent reduction in their cash compensation package.

The current restructuring, the second in over 1-1/2 months, is aimed at saving $15 billion in costs through 2009 as the besieged automaker wins back investor confidence.

GM, hit hard by the $4 gas prices, is expected to shake up its product portfolio to include a new line-up of fuel-efficient and environment-friendly vehicles.