With shares hitting their lowest value in half a century, struggling North American automaker General Motors announced Tuesday it will lay off salaried workers at its North American facilities.
GM will also cut truck production, suspend its dividend and borrow between $2 billion and $3 billion in response to a slumping U.S. market, GM chairman and CEO Rick Wagoner said during an announcement to workers in Detroit, Mich.
The steps are intended to save the company $15 billion in a desperate measure to boost its flagging North American operations.
Wagoner, calling the cuts "tough but necessary," said GM had no other choice in the face of falling U.S. sales and the market shift towards smaller, more fuel efficient cars in response to record-high fuel prices.
Three years ago, GM sold 17 million vehicles in a 12-month period. This year, the company predicts sales of just 14.7 million vehicles.
BNN's Michael Kane told Canada AM on Tuesday that GM had to take action.
"Today's restructuring announcement by General Motors, the second in six weeks, is expected to stop the bleeding and restore investor confidence after the company shares fell to a 54-year low," Kane said.
"They closed yesterday at 9.38, down almost 5.5 per cent."
In June, GM announced that four truck and SUV plants would be closed as consumer demand for the gas-guzzling vehicles shrunk in response to high fuel prices.
Among those closures was the truck plant in Oshawa, Ont.
"The elimination of high paying jobs started in 2000 and since that time we have seen GM's salaried workforce fall from 44,000 down to 32,000," Kane said.
General Motors has announced it will now concentrate on building fuel-efficient vehicles in response to changing market demands.
The GM Oshawa truck plant's closure will be complete by the end of next year, the company has said. The facility employs 2,500 people but it is not clear exactly how many jobs will be affected.
"I just left a meeting with General Motors right now; they're not confirming that they're going to close it earlier," Canadian Auto Workers union local 222 president Chris Buckley told CTV Toronto on Tuesday morning.
"But when the CEO of the corporation says he's going to accelerate previously announced plant closures, that makes me extremely nervous here in the city of Oshawa."
GM spokesman David Patterson said the company has not set a specific date for when the plant will close.
"We want to work with the CAW, we're in discussions with them," Patterson told CTV Toronto.
"We'll need to work through exactly when (the closure) takes place, just as we're also working on bringing new cars into the car plant."
Oshawa Mayor John Gray says the city must diversify to survive.
"What we're going to do is continue the tried and true -- making sure Oshawa is very business-friendly and we continue to incubate good, small businesses."
At the time the four plant closures were announced, Wagoner said it was unlikely the production facilities would be reopened and no new products were slated for production in lieu of the trucks and SUVs.
In addition to adding more small, fuel-efficient vehicles to its roster, GM also has plans to have the Chevrolet Volt -- a plug-in electric car -- in dealers' showrooms by the end of 2010.
The cuts announced in June should save GM $1 billion a year, Wagoner said, in addition to earlier cuts worth roughly $15 billion.
The Canadian Auto Workers were shocked at the June cuts, which came just weeks after a new three-year agreement reached in mid-May between the union and GM.
With a report from CTV Toronto's John Musselman
