US GM announces more cuts to help raise $15bn

15 July 2008 15:23  [Source: ICIS news]

HOUSTON (ICIS news)--General Motors (GM) is cutting more than 20% of its salaried-employment costs, reducing truck production and suspending its dividend - all in an attempt to increase liquidity by $15bn (€9bn) through 2009, the US automobile maker said on Tuesday.

GM will also consider selling off $2bn-4bn of its global assets, the company said. Among the assets being considered is its Hummer brand.

GM is suffering from a weak US economy, a consumer shift away from trucks and the lowest domestic sales volume in a decade, the company said.

The troubles in the auto industry have trickled down to chemical companies, with several plastic-parts producers filing for bankruptcy protection.

The auto industry is an important end user of rubber hoses, plastic dashboards, catalysts, fibres, adhesives and coatings.

Each automobile, contains an average of $2,200 in chemistry, according to the American Chemistry Council (ACC).

As part of its plan, GM plans to reduce its truck volume by 300,000 vehicles by the end of 2009, the company said.

Half of the cuts will come from accelerating previous reduction plans, GM said. The rest are new reductions.

GM will also will cut more jobs through attrition, early retirement and layoffs, the company said.

It will eliminate health-care coverage for US salaried retirees, GM said. The company will increase pension payments to help offset the suspension of health-care coverage.

Also, company executives will receive no cash bonuses this year, GM said.

The company announced other programmes that, taken together, will increase GM's liquidity to $15bn.

"Today's actions, combined with those of the past several years, position us not only to survive this tough period in the US, but to come out of it as a lean, strong and successful company," according to a statement by Rick Wagoner, GM CEO.

"We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix," he said.

($1 = €0.63)

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