- The Washington Times - Monday, November 21, 2005

General Motors Corp. will eliminate 30,000 jobs and cut production by 1 million automobiles in North America in a broad restructuring that will shut down a dozen factories and support facilities, the company’s chief executive said yesterday.

“The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work,” said Rick Wagoner, who also is chairman of the Detroit company. “But these actions are necessary for GM to get its costs in line with our major global competitors.”

The U.S. auto industry is buckling under the weight of intense foreign competition and heavy wage, pension and health care costs.

Ford Motor Co. said last week that it would eliminate about 4,000 white-collar jobs in North America next year, in addition to the 2,750 it had planned to cut this year. The company reported a third-quarter loss of $1.6 billion, before taxes, for its operations in the region.

And parts maker Delphi Corp., which was spun off from GM and last month filed for bankruptcy, reported a third-quarter net loss of $788 million.

Mr. Wagoner said last week that GM has no plans to declare bankruptcy.

But the world’s biggest auto manufacturer is hoping to trim $7 billion from its $41 billion in annual operating expenses by the end of next year as it eliminates U.S. jobs and production.

The company is reducing auto production by 30 percent, down to 4.2 million vehicles per year by 2008, and slashing close to 10 percent of its global work force. Mr. Wagoner said his company plans to cut jobs largely via attrition and early retirement programs.

The United Auto Workers, however, said its members are protected by the union’s labor contract with GM, which runs to 2007, and that it would resist forced early retirements.

“The UAW will do everything in its power to … protect the interests of the workers impacted by today’s action,” said UAW President Ron Gettelfinger and UAW Vice President Richard Shoemaker.

The union officials said GM should focus on designing and marketing products that consumers want, rather than cutting the number of workers.

The company’s sales this year have slid as rising fuel prices crimp consumer demand for sport utility vehicles and trucks, important sources of profits for American auto manufacturers in recent years. Foreign competitors such as Toyota and Honda, meanwhile, have been slowly eroding GM’s market share in the U.S. and Canada.

GM’s retail sales during the first part of the month were down 24 percent, and its market share dropped to 18.8 percent from 21 percent during this time last year. Ford commanded 15.3 percent of the U.S. market, down from 18.3 percent, and DaimlerChrysler held steady at 13.6 percent, according to marketing information firm J.D. Power and Associates.

Toyota’s market share, meanwhile, climbed to 17.9 percent from 15.4 percent; Honda’s rose to 12.2 percent from 10.2 percent; and Nissan North America’s remained flat at 7.8 percent, J.D. Power said.

“The basic reason is, [GM] hasn’t fielded a line of cars that people like and will pay for,” said Gerald Meyers, a professor at the University of Michigan Business School and former chairman of American Motors Corp.

If GM fails to produce cars that catch on with consumers, the latest round of cuts are “just the beginning, it’s not the end,” he said. “If they continue to lose market share, there is going to be another cutback, and maybe another.”

While GM is trimming operations, Toyota and other foreign players are expanding in North America.

Toyota, which makes popular vehicles and is not burdened by generations of pension and health care costs, has 11 vehicle manufacturing and parts facilities in North America, and is building plants in San Antonio and Woodstock, Ontario. A Toyota subsidiary reportedly is building a truck factory in Arkansas.

Toyota said that by 2008 it will increase capacity to 1.81 million cars and trucks in North America.

Though GM is struggling in the U.S., some of its overseas operations are prospering. The company’s manufacturing and sales figures in China, for example, are rising steadily. And GM recently announced an expansion of hybrid vehicle research, development and manufacturing capacity in the Asian nation.

GM shares closed yesterday down 47 cents, almost 2 percent, at $23.58 in trading on the New York Stock Exchange.

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