DETROIT — In the last few weeks, General Motors Corp. has been facing a near constant drumbeat of negative news and bankruptcy whispers, putting Chairman and CEO Rick Wagoner under considerable pressure to speed up his turnaround plan.
Wagoner sent employees a memo last week, assuring them that bankruptcy isn't on the radar at the world's largest automaker. He took further action Monday, saying the company plans to cut 30,000 hourly jobs and close 12 facilities by 2008. The announcement had been planned for next month, but the timetable was accelerated as GM shares plunged to their lowest level in 18 years.
Still, investors weren't too satisfied. GM shares fell 47 cents, or nearly 2 percent, to close at $23.58 Monday on the New York Stock Exchange. They have traded in a 52-week range of $20.60 to $40.82.
Wagoner was resolute, saying he continues to have board members' confidence and hasn't considered stepping down.
"I have given no thought to anything but turning the business around," Wagoner said. "I wasn't brought up to run and hide when things get tough."
But the reaction of some analysts suggested that the drumbeat will continue. Merrill Lynch analyst John Casesa said GM's plan leaves many questions unanswered, including what the company will do about its growing retiree burden. The automaker now has 2.5 retirees for every active worker.
"At some point this becomes an untenable situation and is the key reason that GM cannot shrink to a competitive size; that is unless the current labor agreement is drastically revised," Casesa wrote in a note to investors.
It's unclear how much help GM can count on from its unions. The United Auto Workers called GM's plan "devastating" and warned it will make negotiations more difficult.
"Workers have no control over GM's capital investment, product development, design, marketing and advertising decisions. But, unfortunately, it is workers, their families and our communities that are being forced to suffer because of the failures of others," UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement.
To get production in line with demand, GM will cut 30,000 jobs, which represent 17 percent of GM's North American hourly and salaried work force of 173,000, and close nine assembly, stamping and powertrain plants and three parts facilities. GM's U.S. market share fell to 26.2 percent in the first 10 months of this year compared with 33 percent a decade ago, the result of increasing competition from Asian rivals. GM lost almost $4 billion in the first nine months of this year.
"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," Wagoner said. "But these actions are necessary for GM to get its costs in line with our major global competitors."
GM isn't the only U.S. automaker cutting costs. Last week, Ford Motor Co. told employees it plans to eliminate about 4,000 white-collar jobs in North America early next year as part of a restructuring plan.
GM said the plant closings are part of a plan to shave $7 billion off its $42 billion annual bill for operations by the end of next year. That includes a $3 billion cut in health care costs, $1.5 billion in manufacturing cuts and $1 billion in savings on materials.
Standard & Poor's Ratings Services, which lowered GM's debt to "junk" status earlier this year, said the company remains on credit watch. S&P said the staff cuts are substantial but may not be adequate considering GM's problems, including a possible strike at Delphi Corp., its largest supplier; an ongoing federal investigation into accounting errors; and an uncertain outlook for its new lineup of full-size sport utility vehicles, which may fall victim to consumer concerns about gas prices.
Goldman Sachs analyst Robert Barry said those headwinds could offset any gains from the cuts.
"We are not confident the restructuring addresses the core issue that GM brings too much supply to the North American market," Barry said in a note to investors.
GM has 77 facilities in North America, including 30 assembly plants, 23 stamping plants and 24 engine and transmission plants, spokesman Stefan Weinmann said.
Wagoner said the job cuts will come primarily through attrition and early-retirement packages. GM has an annual attrition rate of about 7 percent, Wagoner said. The average hourly worker is about 49, he said.
Some workers who don't choose to retire could go into jobs banks, which pay laid-off workers their salary and benefits. Wagoner said details about layoffs and early-retirement packages still need to be worked out with the UAW, the Canadian Auto Workers and other unions.
Earlier this month, GM's U.S. hourly workers agreed to pay more for their health care benefits, a concession UAW leaders said was necessary because of GM's financial status. But the union responded angrily to GM's latest announcement, saying the company needs to design attractive and exciting vehicles instead of trying to shrink its way to prosperity.
The plan will cut the number of vehicles GM is able to build in North America by about 1 million a year by the end of 2008. GM will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Wagoner said GM's plants are increasingly flexible and will be able to add capacity to meet market demands.
GM said assembly plants will close in Oklahoma City; Lansing, Mich.; Doraville, Ga.; and Ontario, Canada. One production line will close and one will remain open in Spring Hill, Tenn. The company is removing shifts at plants in Moraine, Ohio, and Ontario.
An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.
Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore. One other site will to be announced later.