DETROIT -- General Motors plans to cut 30,000 jobs, close four assembly plants and four stamping and powertrain plants, and trim production at several other plants by the end of 2008, CEO Rick Wagoner said Monday.
The moves will cut about 1 million units of production capacity from GM by the end of 2008, Wagoner said. The plan would allow the company to achieve $7 billion in cost reductions by the end of 2006 -- $1 billion above GM's previous goal -- and represents 5,000 more job cuts than the automaker had indicated at the annual shareholders meeting in June.
GM warned that it will need to take a "significant restructuring charge" associated with this plan but did not spell out how large a charge it would be or when it would be taken. Wagoner said he was not prepared to discuss the company's 2006 profit outlook.
The cuts affect about a quarter of the North American factory work force at GM and are the deepest since it eliminated 21 plants and 74,000 jobs over four years beginning in December 1991.
Most of the job cuts will come through attrition and early retirement programs, Wagoner said. He noted that as much as 7 percent of GM's hourly work force retires each year, but that is not enough to reach GM's job-cutting goal.
The automaker will have to negotiate an early retirement deal with the UAW. In a conference call with financial analysts, Wagoner could not say how many of GM's hourly workers are within a year or two of retirement age. He said the average age of GM's hourly work force is in the high 40s.
Wagoner said GM plans to cut 7 percent of its salaried work force next year, bringing the total reduction to salaried workers to 40 percent since 2000.
Wagoner also increased the planned structural cost reduction to $6 billion from the automaker's earlier target of $5 billion and said GM will make a $1 billion cut in material costs by the end of next year. Included in those cost cuts is GM's agreement with the UAW to reduce health care costs and save GM $1 billion a year.
"This is tough medicine for us and tough medicine for everyone in our company," Wagoner said. "We're trying to work this as effectively as we can."
Wagoner said the announcement is a "big move" from the scope of all of GM's capacity reductions made over previous years. "This will get us going," he adds.
The assembly plants to close are:
GM will close these stamping and powertrain plants:
GM also will reduce production at these sites:
GM also will close a parts distribution center in Portland, Ore., in 2006, while the parts distribution center in St. Louis will be converted to a crash parts warehouse.
In 2007, GM will close a parts processing center in Ypsilanti, Mich. It will close another parts processing center that year, GM said, but the site has not been determined.
With the addition next year of production at the Delta Township plant in Lansing, Mich., GM will have capacity in North America of 4.2 million units a year, based on two production shifts at each plant. That would restore GM production capacity to 100 percent, Wagoner said. GM's assembly plants in North America are running at 74 percent now. Last year, GM sold 4.6 million cars in North America.
The UAW responded to Wagoner's announcement with an angry prepared statement indicating it would push to keep furloughed workers on GM's payrolls for the duration of its current labor contract, which expires in 2007. That could mean that laid off workers would continue to receive most of their pay and benefits, with the plant closings providing little immediate savings to GM.
"The UAW-represented workers impacted by today's action are protected by our job security program as well as other provisions and protections of the UAW-GM National Agreement," the union said in its statement. "We have said consistently that General Motors cannot shrink itself to prosperity."
"GM's return to prosperity depends on its offering products that consumers find attractive, exciting and want to buy. Only then will GM's market share stabilize and grow, only then will revenues increase and only then will General Motors return to prosperity," the UAW said.
Pressures on Wagoner have mounted amid concerns that nothing short of a change at the top would improve the automaker's fortunes.
Wagoner took the company's helm in 2000, but assumed control of daily operations at its North American unit in April 2005. On Monday, he dismissed any notion stepping aside.
"I haven't given any consideration whatsoever to that. I wasn't brought up to run and hide when things get tough," he said. "We're on the battlefield, we're taking the actions we need to, and I'm convinced that's the way the company is going to get righted."
Wagoner said his planned cuts in GM's North American production capacity did not mean that it would be ceding ground to Toyota as the world's No. 1 automaker when ranked by production.
Some analysts see that as inevitable, however, and Wall Street remained uncertain about his strategy.
"The CEO is effectively trying to calm the markets and show that he's still in control," said Richard Steinberg of Steinberg Asset Management. "We would anticipate management changes over the next couple of years if they don't figure out a game plan."
GM and its crosstown rival Ford Motor Co. has been grappling with high health care and commodities costs, loss of U.S. market share to foreign rivals, and slumping sales of large SUVs that used to be its profit centers but have now lost popularity due to high gasoline prices.
To make matters worse, GM's main parts supplier -- financially troubled Delphi Corp. -- is battling with its unions and will ask the court to void its labor contracts if a deal is not reached by mid-December. A strike at Delphi could shut down some GM and Delphi plants and could force the automaker to spend billions of dollars a week, analysts have said.
Shares of GM fell 2 percent to $23.58 on the New York Stock Exchange Monday afternoon. The company has lost nearly $4 billion this year, while its shares have lost more than 40 percent of their value and hit a 14-year low last week.
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contributed to this report.