About 1,600 white-collar workers at General Motors Corp. will lose their jobs in the next few days as the troubled automaker accelerates cost cuts in order to qualify for more government aid.
GM North America President Troy Clarke said Monday in an e-mail to employees that the layoffs are needed to ensure the company’s long-term viability.
“In these unprecedented times, GM is reinventing every aspect of our business, including our organizational size and structure, to create a lean and agile company,” Clarke wrote in the e-mail obtained by The Associated Press.
Clarke said the next week will be “a very trying time for the entire GM team, but especially for those employees directly impacted by these actions.”
GM is living on $13.4 billion in government loans. The automaker faces a June 1 deadline to cut costs and gain concessions from stakeholders in order to get more government help.
Last month GM began cutting 3,400 U.S. salaried jobs as part of the 47,000 job cuts that it will make worldwide by year’s end. Some of the positions will be cut through normal attrition, but most will be through involuntary layoff.
Hardest hit will be the Detroit metropolitan area, especially at GM’s downtown headquarters and its sprawling technical center in suburban Warren, where the company does much of its engineering and design work.
The company will be close to its 3,400 goal after the 1,600 layoffs, spokesman Tom Wilkinson said.
The cuts may go even deeper as GM moves toward the government-imposed deadline. CEO Fritz Henderson said Friday that the company will close more factories beyond the five announced in February. Factories to be closed have not yet been identified.
“There is no question, as we look at our revised plan to go deeper and go faster in our operational restructuring, there will be further reductions in manpower, people, that are going to affect communities, affect plants and people, both on hourly and the salaried side of the business,” Henderson told reporters.
Clarke’s e-mail said GM will provide laid-off workers with resources and support through the process.
Wilkinson said workers would get severance pay of about two weeks for every year of service, up to six months. The packages include base pay and the company’s share of health care and other benefits, he said. The company will provide services to help them find other jobs for up to three months, he said.
GM must cut costs and win concessions from bondholders and its unions in order to get more government aid. The government’s auto task force has said the company must persuade the holders of $28 billion in GM bonds to take stock in exchange for part of the debt.
Unions in the U.S. and Canada must agree to concessions, too. For GM to qualify for more help, the United Auto Workers must agree to take stock for part of the roughly $20 billion that GM must pay into a union-run trust that will take over retiree health care costs starting next year.
If it doesn’t restructure enough by the deadline, Detroit-based GM could be forced into Chapter 11 bankruptcy protection with the government providing financing. The government advocates a short “surgical” bankruptcy to cancel debt, change union contracts and separate underperforming units from the company.
Henderson said Friday that the company still would prefer to restructure out of court as it tries to prove it can survive to repay the government, but he conceded that bankruptcy protection is more likely than it was in the past.
Chrysler LLC faces an earlier deadline of April 30 to gain similar concessions and finalize an alliance with Italy’s Fiat Group SpA. Fiat and Chrysler are discussing a deal that would give Fiat a 20 percent stake in the Auburn Hills, Mich.-based automaker in exchange for Fiat’s small-car technology.
Michigan Gov. Jennifer Granholm said that as deadlines for Chrysler and GM loom, all parties involved are making a “serious effort” to find a solution.
“But that doesn’t take away the pain people feel when they get a pink slip and are shown the door,” she said Monday at an automotive engineering conference in Detroit. “I want to see that there’s a commitment to community and people affected by the shift in focus and dynamics.”
Copyright 2009 The Associated Press.