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Last Updated: Monday, 21 November 2005, 21:49 GMT
Car giant GM to cut 30,000 staff
GM sports utility vehicles
GM has been hit by falling sales
US carmaker General Motors is to cut 30,000 jobs in North America, in a restructuring that aims to save $2.5bn (1.4bn) a year and revive the company.

The loss-ridden automotive group will also close down nine assembly, stamping and Powertrain engine-maker facilities.

Along with other cutbacks it should reduce costs by a total of $7bn a year by 2006 - $1bn more than first planned.

GM has suffered from falling sales, a drop in market share and sky-high labour costs.

Hard times

The news comes just days after the company's shares hit 14-year lows amid fears of a possible strike at its bankrupt parts supplier Delphi, which could shut down some GM and Delphi sites.

This has been a difficult period for all of us at GM
Rick Wagoner, GM chief executive

Earlier this year, the firm had warned it would cut 25,000 jobs by 2008 mainly through attrition or natural wastage.

The latest announcement represents an increase of 5,000 on that amount.

GM plants earmarked for closure under the plan are in Oklahoma, Michigan, Tennessee, Georgia and Ontario in Canada while production will be cut back in Ohio and at GM's second Canadian plant.

'Difficult decision'

"This has been a difficult period for all of us at GM but I'm confident that by working together we can and will get through this," said Rick Wagoner, GM's chief executive.

"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.

"But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible," he added.

The embattled carmaker has been hit by surging labour and raw materials costs as well as rising competition from foreign rivals, a slump in demand for its sports utility vehicles (SUVs) and overcapacity at its plants.

In October, the firm agreed a deal with unions that should help cut its annual healthcare costs by $3bn.

However, the main GM union, the UAW, reacted angrily to the news, saying that it would invoke the job-security guarantees in its union contract, which would protect workers' jobs until 2007.

"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.

To add to its woes, the firm warned earlier this month that it will have to restate its 2001 accounts after they were overstated by about $300m, while its accounts are also being investigated by the US Securities and Exchange Commission.

Shares of GM closed down 47 cents at $23.58. on the New York Stock Exchange early Monday afternoon.

They have lost more than 40 percent of their value this year.

The GM announcement is the largest single US layoff announcement since K-Mart announced 37,000 job losses in 2003.




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SEE ALSO:
GM shares stumble to 18-year low
17 Nov 05 |  Business
GM workers agree healthcare deal
11 Nov 05 |  Business
GM reveals $300m accounting error
10 Nov 05 |  Business
GM and Ford continue losing sales
01 Nov 05 |  Business
GM signs health deal with unions
17 Oct 05 |  Business
Delphi gets $2bn finance package
28 Oct 05 |  Business


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