DETROIT - General Motors Corp. said Tuesday it will lay off salaried workers, cut truck production, suspend its dividend and borrow $2 billion to $3 billion to weather a severe downturn in the U.S. market.
GM said the moves will raise $15 billion to help cover losses and turn around its North American operations, including $10 billion from internal cost-cutting and $5 billion from selling some assets and borrowing against others.
“In short, our plan is not a plan to survive. It is a plan to win,” GM Chairman and CEO Rick Wagoner said in a broadcast to employees.
Bull crap!
General Motors posted a $3.3 billion dollar loss back in April 2008, which included a $1.45 billion write down in GM's interest in the value of its finance arm, General Motors Acceptance Corp. The write-down of GMAC was a result of the housing market downturn. The company also lost $812 million in sales of its pickup trucks and SUVs due to the high gas prices. GM is planning to sell the Hummer line of SUVs, and had to deny speculations that the company was heading into bankruptcy. The situation at General Motors is bad. This is a survival plan. According to the MSNBC story, GM plans on cutting health care benefits to salaried retirees over 65 by providing a pension increase as compensation. There will be further job cuts through attrition, and plant closures as GM reduces its truck production capacity by 300,000 units. The company has already suspended its $1 per share dividend. What GM needs to do is shift its production from the high-profit trucks and SUVs to the production of smaller, more fuel-efficient cars that customers are demanding--including the development and production of hybrid cars and trucks. That will be a problem for GM, considering the intense competition of hybrid cars being sold by the Japanese car makers, such as Toyota's best-selling Prius. And let us not forget that GM is embarking on this "plan to win" during a U.S. economic recession, where Americans are cutting back on their spending, inflation and gas prices are increasing, and there are still big worries about job losses. Will GM be able to succeed and win under this new plan, as GM's chairman Rick Wagoner has boasted?
I can't say.
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