GM may be mulling thousands of job cuts
No. 1 US automaker General Motors Corp is planning to cut thousands of white-collar jobs and is considering whether it should sell or stop production of more of its brands, The Wall Street Journal said, citing people familiar with the matter.
Both moves are part of a broader re-evaluation of the company’s strategy and of its ability to meet an internal projection of returning to profitability in 2010, the people told the paper. The job cuts are likely to be approved when GM’s board of directors meets in early August, the people said. The reductions would be in addition to earlier announced cuts. Management may also present the board with options for raising additional cash, they told the paper. The board may also hear management’s latest thoughts on whether General Motors should trim the number of brands it offers in the United States, the people told the paper. All but the Cadillac and Chevrolet brands, which GM considers core to its business, are undergoing close scrutiny, some other people told the paper.
In the past few years, as GM has run up massive losses, some board members and some executives have on occasion raised questions about its plethora of brands, only to be rebuffed by CEO Rick Wagoner, the paper said, citing people familiar with the matter. GM has put its Hummer brand up for sale to prospective buyers thought to include Mahindra & Mahindra, but the SUV brand is expected to fetch far less than $1 billion in any sale.
The company, hit by rising oil and raw material prices, the credit crunch and the housing downturn, will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is “not impossible” if the US auto market continues to slump, Merrill Lynch had said last week. US auto sales plunged in June to a 15-year low. Although GM clung on to its top spot in the American market, some analysts have raised concerns over the financial state of the firm, whose shares fell to a 54-year low earlier this month. GM could not be immediately reached for comment. (Reuters)
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