GM to Cut 25,000 Employees
July 1, 2005
General Motors will cut at least 25,000 employees at U.S. assembly plants over the next three years, GM Chairman Rick Wagoner told shareholders at GM's annual meeting last month. Cost reduction and capacity utilization is essential for GM to turn around its North American operation, Wagoner says. "In order to achieve full capacity utilization based on conservative volume planning scenarios, we expect to close additional assembly and component plants over the next few years," Wagoner says, "and to reduce our manufacturing employment levels in the U.S. by 25,000 or more people in the 2005 to 2008 period." Wagoner says those actions will generate annual savings of approximately $2.5 billion. No other specifics were provided. This year, GM investors have seen their shares fall to the lowest price in more than a decade as the automaker's market share has slipped and GM's bond rating has been cut to junk, or noninvestment grade, status by two ratings firms. GM's losses topped $1 billion in the first quarter, and sales for profitable, high-margin SUVs have slumped.