General Motors boss Rick Wagoner has revealed further cost-cutting measures in the US, intending to protect the embattled manufacturer from bankruptcy.
The cuts are intended to save nearly $10 billion (£502m) and include reducing the cost of salaried workers by a further 20 per cent, slashing pick-up truck production and cutting back on development costs.
GM’s European operations, including Vauxhall, have yet to be affected by major cutbacks. But in America the world’s erstwhile largest car manufacturer is suffering from the one of the largest crises in its century-long history. GM’s share price has fallen dramatically in the last week and, in the face of fears the company could run out of money, Wagoner’s new turnaround plan is intended to win back market confidence.
Labour costs will be reduced through another programme of early retirement and voluntary redundancy, wages will be frozen and healthcare benefits will be pared back. The product development budget also faces cutbacks, with the launch of new models delayed, and the company will slash production of 300,000 of its slow-selling pick-up trucks by the end of the 2009, doubling the cuts that had already been announced.
Like the other members of America’s ‘big three’, Ford and Chrysler, GM has been hit hard by the rise in oil prices and America’s economic downturn, strangling demand for the large pick-ups and SUVs on which its profits were based. The company has previously announced that its Prius rival, the Chevrolet Volt, will be brought to market earlier than anticipated.