Dreaded white-collar job cuts at General Motors Corp. started Tuesday as the wounded automaker began to deliver on promises to the government to shrink its work force so it can be profitable at lower sales levels.
On Tuesday morning, GM told 160 people at its manufacturing engineering operations in Warren, Mich., that they would be laid off as of April 1, spokesman Tom Wilkinson said.
It’s the beginning of 3,400 salaried layoffs in the U.S. and part of the 47,000 job cuts that GM wants to accomplish worldwide by the end of the year, Wilkinson said.
“It will impact every area of the business. Some of those will be through normal attrition, but there will be a significant number of involuntary separations coming from now through the early part of May,” Wilkinson said.
Tuesday’s cuts were mainly engineers, coming as GM’s North American manufacturing footprint shrinks to match reduced sales and market share.
The company has announced the closure of nine assembly, parts stamping and powertrain factories since the end of 2005, and it plans to close five more factories.
“These are good capable people,” Wilkinson said of those being laid off. “The reductions are just necessary to implement the viability plan and restructure the business to make it self-sustaining.”
GM is living on $13.4 billion in government loans and has requested another $16.6 billion to weather the worst auto sales downturn in 27 years.
Chrysler LLC also is taking government loans. The company has received $4 billion so far and wants another $5 billion.
Both companies were required to submit restructuring plans to the Treasury Department on Feb. 17 showing how they can become viable and repay the loans. The deadline for finalizing the plan is a week away, on March 31.
Besides the salaried job cuts, GM plans to cut 18,000 more U.S. blue-collar workers by the end of the year. Tuesday is the deadline for hourly workers to accept buyout and early retirement offers.
Detroit-based GM, which now employs 243,000 people across the globe, will give roughly two weeks of severance pay to employees for each year they have worked. That includes base salary plus the company’s share of most benefits.
The automaker has 29,650 salaried employees and 62,400 blue-collar workers in the U.S.
GM workers have until midnight Tuesday to decide if they will take $20,000 cash and a $25,000 car voucher to leave the company.
Chrysler blue-collar workers also are facing a similar dilemma with the deadline approaching on Friday. They can get $75,000 cash buyout and a $25,000 voucher to buy a car to leave the company. Workers eligible for early retirement can get $50,000 and a $25,000 car voucher.
GM and Chrysler workers have balked at the offers due to uncertainty over whether the government will make more loans to keep the automakers afloat or let them go into bankruptcy protection. UAW local leaders say many will apply for the buyout and early retirement packages and perhaps rescind the offers if the companies get more government loans.
Workers have seven days to rescind their applications.
