GM to begin sacking staff

General Motors, reeling from US$10.6 billion ($17 billion) in losses last year, will fire hundreds of its US salaried employees in at least two waves starting next week, according to people familiar with the plan.

The firings, which begin on March 28 at several locations on what employees are calling "Black Tuesday," will be followed by another round in April, according to the people, who asked not to be identified. The workers will get GM's normal salaried severance package with no additional buyouts, the people said.

GM spokesman Steve Harris had no comment.

The moves come in addition to offers of buyouts of up to US$140,000 and retirement incentives made to 113,000 hourly workers in the US this week. Job cuts form part of chief executive Rick Wagoner's plan to reduce losses by slashing costs and selling assets while bolstering revenue by redesigning vehicles.

"They're liquidating, they're firing, they're retiring," said Sean McAlinden, a labour analyst at the Centre for Automotive Research in Ann Arbor, Michigan. "This is a GM that's getting in shape much faster than it's ever before, in any past restructuring."

Wagoner said in November that the Detroit-based car maker planned to reduce its salaried and contract workforce this year by about 7 per cent. He didn't say how many workers would be affected. GM has 36,000 salaried US workers and doesn't disclose how many contract employees it has, spokesman Robert Herta said.

"We're getting close to benchmark, if not at benchmark performance in salaried and contract executive levels versus our competitors," Wagoner said in a November 21 press conference. "By the same token we think we see areas to improve, so we will be pursuing those in 06."

GM in January already fired several hundred US contract workers, according to a person familiar with that action. In the first quarter of 2005, GM paid about US$148 million for the voluntary buyouts of 2800 salaried employees, or 5 per cent of the salaried workforce.

GM introduced a new severance package this year for employees who are fired, according to a document from GM's compensation policies obtained by Bloomberg and confirmed by people familiar with the programme. The modifications were to "ensure competitiveness in the marketplace".

Employees with the company at least a year who are fired will be paid one month of their base salary per full year of employment, up to 15 months, according to the policy. Those workers also maintain their health-care insurance for that period and receive three months of outplacement assistance.

GM's salaried and contract workforce had been cut 32 per cent from 2000 to the end of last year, Wagoner said in November. When Wagoner took over as CEO in 2000, GM had 44,000 US salaried workers, 18 per cent more than it does now.

"I don't remember GM ever doing anything like this before, not firing people and putting them out on the street with a box," said McAlinden, who has studied GM's past restructuring plans. "They were called 'Mother GM' for a reason."

The firings are the latest in several actions aimed at GM's salaried workforce. On March 7, the car-maker said it would freeze defined-benefit pension plans for its 36,000 salaried workers and switch to a defined-contribution plan.

That change will save GM, the world's largest car-maker, about US$420 million on a pretax basis in 2007 and reduce the company's year-end 2006 pension liability by about US$1.6 billion.

Wagoner also said on February 7 that he would slash his own compensation in half and trim pay by 30 per cent for his three top lieutenants.

GM earlier won US$1 billion in annual health-care cuts from union employees, part of a plan to restore profit by trimming US$7 billion in yearly costs.

GM in February said it would cut pretax health-care expenses by about US$900 million a year by capping salaried health-care coverage at 2006 levels for eligible GM salaried workers. GM salaried employees hired after January 1, 1993, don't get retiree health care.

GM also halved its US$2-a-share annual dividend.

- BLOOMBERG