DETROIT — General Motors Corp. plans to slash its U.S. and Canadian white-collar salary budget by 20 per cent, make further cuts in truck production, suspend its dividend and borrow $2-billion (U.S.) to $3-billion as it struggles with a declining U.S. market.
GM chairman and CEO Rick Wagoner announced the cuts to employees Tuesday. He did not comment specifically on Canadian operations, and representatives of GM Canada said they couldn't immediately determine the local impact on jobs or production.
The moves will raise $15-billion to help turn around its North American operations, the company said.
“We recognize we can't sit back and wait for U.S. conditions to improve,” Mr. Wagoner said in a media briefing.
“We need to continue to be proactive and even take some very tough actions to ensure our survival and our success.”
Chief operating officer Fritz Henderson said a large chunk of the reduction would come from cutting health care benefits for American salaried retirees.
Those people would get a pension increase from the company's pension fund to augment U.S. Medicare payments and supplemental insurance, the company said.
Several thousand jobs will be cut through attrition, buyouts and early retirements, Mr. Henderson said. The company could resort to involuntary layoffs, he added.
GM has 40,000 salaried employees in the U.S. and Canada.
Mr. Henderson said the company intends to reduce its truck production capacity by 300,000 units — 150,000 more than it announced in June.
The company will speed up closures of its truck and sport utility vehicle factories in Oshawa, Ont.; Janesville, Wis.; Silao, Mexico; and Moraine, Ohio, and it will make thousands of job cuts at other truck assembly and parts factories, Mr. Henderson said.
The company said last month that its truck-assembly plant in Oshawa, Ont., would be among four of its North American plants slated for closure next year, meaning about 2,600 people would lose their jobs.
Mr. Henderson would not say Tuesday if further plants will be closed, and said the company still must negotiate further cuts with its unions.
GM said it will suspend its $1 annual dividend immediately, which will improve liquidity by $800-million through 2009. It's the first time the company has suspended its dividend since 1922.
The company also plans to raise $2-billion to $4-billion through the sale of assets, including the Hummer brand.
It also plans to borrow $2-billion to $3-billion by pledging assets including stock of foreign subsidiaries, brands, real estate and its stake in its finance arm.
GM and other auto companies have been hammered by high gas prices, the weak economy and a rapid shift in consumer tastes away from trucks and SUVs. GM's American sales were down 16 per cent in the first six months of this year, led by a 21 per cent decline in truck sales.
GM is forecasting total U.S. sales of 14.7 million this year. That's down from 17 million as recently as 2005.
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