DETROIT – General Motors Corp. will cut 10,000 jobs, or 14 percent of its salaried work force, this year as the auto maker struggles to cope with a steep drop in world-wide vehicle sales.
The job cuts are part of the plan the company submitted to Congress in December to secure bailout funding from the federal government, The Wall Street Journal reported. The company still has a week to submit an update on the restructuring plan’s viability.
Some 3,400 U.S. workers, or 12 percent of GM’s U.S. salaried work force, will be shed, with the bulk of the cuts happening by May 1. Most of those remaining will see a 3 percent to 7 percent pay cut on that date through year’s end, while executives will get a 10 percent reduction. No breakout was provided for job cuts in Michigan, but GM�??s world headquarters is in Detroit.
The auto industry is suffering under a wrenching sales decline, notably in the U.S., where sales fell to a 27-year low in January. As consumers cut back their discretionary spending and try to save money during the recession, they make fewer purchases of big-ticket items like vehicles.
Research firm R. L. Polk & Co. on Tuesday issued a 2009 projection for light-vehicle sales showing a 13 percent decline to 56.8 million units world-wide. The projected drop for the U.S. is 19 percent, following a 17 percent decline in 2008.
GM posted an 11 percent drop in 2008 sales, capping a year in which it lost its crown as the world’s biggest auto maker to Toyota Motor Co. after 77 years.
The company’s woes led it to seek federal aid, getting $13.4 billion from the government as it burns through billions of dollars in cash a quarter to fund its money-losing operations. GM has said bankruptcy is an option if its woes don’t improve.
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