June 8, 2005
GM to reduce workforce by 25,000
Wilmington, Delaware – Speaking to the company’s annual meeting of stockholders, General Motors Corporation Chairman and CEO Rick Wagoner outlined some tough moves the company expects to make through 2008.
Wagoner blamed a US$1.3 billion first-quarter loss on a high structural or fixed cost, with lost revenues caused by lower retail sales and a weaker sales mix of fewer high-profit SUVs and lower-profit cars, as well as higher prices for materials and health care costs.
Among the plans outlined for rejuvenation include an increase in capital expenditures, mostly in North America; advanced timing of several high-volume, high-profit programs such as large pickups and mid- and large-size SUVs; more development of crossovers such as entry luxury and premium models, and hybrids and other fuel-efficient technologies; and globalization of product development. Wagoner also said that there will be less emphasis on incentives.
In areas of cost reduction, Wagoner outlined plans to move to a global sourcing effort; a reduction in annual North American assembly capacity from six million units in 2002 to five million by the end of 2005; a reduction in 25,000 or more manufacturing jobs in the U.S. between 2005 and 2008; and addressing the company’s health care burden, which is currently at US$1,500 per unit.