Facing imminent bankruptcy, century-old American institution General Motors will cut 10,000 salaried jobs globally and reduce pay for other US white-collar workers by as much as 10 per cent to slash costs and keep $13.4 billion in government loans.
About 3,400 of GM's 29,500 US salaried jobs will be cut by May 1, the company said. The Detroit-based automaker said in a statement it would cut pay temporarily by 10 per cent for US executives and by 3 per cent to 7 per cent for many other US salaried employees. GM is reviewing salaried worker pay and benefits in other countries.
GM needs to accelerate cost-cutting plans after the automaker's US auto sales fell 49 per cent in January. GM posted an 11 per cent drop in 2008 sales, capping a year in which it lost its crown as the world's biggest automaker to Toyota Motor Co. after 77 years. (See: Toyota overtakes GM's sales; emerges top auto seller in the world)
GM and Chrysler LLC must submit progress reports by 17 February on their efforts to restructure their businesses, return to profit and repay $13.4 billion in US loans by the end of 2011. The job cuts are part of the plan the company submitted to Congress in December to secure bailout funding from the federal government. The company still has a week to submit an update on the restructuring plan's viability. (See: General Motors gets $4 billion US government loan, Chrysler still in talks and Chrysler receives $4 billion from US treasury)
The company has already started offering buyouts and early retirement packages to hourly factory workers this week in a bid to cut labour costs. GM will offer its American hourly workers $20,000 in cash and a $25,000 voucher to buy a vehicle as an incentive to retire or leave the company, an official with the United Auto Workers union briefed on the plan said. (See: Cash and cars for auto workers who resign from GM, Chrysler)