GM to cut 25,000 jobs by '08
CEO says automaker plans unspecified number of plant closings.
June 7, 2005: 9:54 AM EDT
NEW YORK (CNN/Money) - Embattled automaker General Motors Corp. anticipates an unspecified number of plant closings in the next three and half years to cut U.S. employment by 25,000 workers, Chairman and CEO Rick Wagoner told shareholders Tuesday.
The head of the world's No. 1 automaker did not give any details other than to say GM needs to cut capacity by the end of 2008.
He said the company's goal is to trim U.S. capacity so that the company gets to 100 percent utilization or better.
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GM (up $0.58 to $31.00, Research) also announced plans to buy more components from suppliers outside the United States, and reported it couldn't yet be sure if it would win needed health care cost reductions from the United Auto Workers union.
A spokesman for the union wasn't immediately available for comment.
GM's UAW contract essentially forces it to pay employees during the life of the contract, even the hourly worker's plant is closed and he or she is laid off. But those protections only run through fall of 2007, when the current four-year pact with the union ends.
GM's Web site says it now has about 181,000 employed in North America, including plants in Canada and Mexico.
Wagoner said GM is committed to trying to win union approval for health care cost savings under the current labor agreement, but added that he couldn't promise shareholders he'd be successful.
"In recent weeks, we have been in intense discussions with the UAW and our other unions focused on a cooperative approach to significantly reduce our health care cost disadvantage," he said. "All parties are working hard on it, in the spirit of addressing a huge risk to our collective futures while providing greater security and good benefits for our employees."
Wagoner said that, for now, GM is committed to trying to trim health care costs in cooperation with the union. His prepared remarks did suggest that there are other options available to the company to save on health care if the union does not agree to changes, although he added, "I don't believe that it serves a useful purpose to speculate on that."