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News > Companies
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GM to offer early retirement
graphic January 8, 2002: 12:19 p.m. ET

No. 1 auto maker to launch program in effort to cut salaried workforce by 10%.
By Staff Writer Chris Isidore
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  • GM CEO says estimates are too low - Jan. 7, 2002
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    DETROIT (CNN/Money) - General Motors Corp. is set to announce a new early retirement program for salaried employees in an effort to again cut combined salaried and contract work force by 10 percent this year.

    GM Vice Chairman Bob Lutz told reporters Tuesday that the moves are not any kind of reaction to the current outlook for the economy or auto sales, which are expected to drop about 10 percent this year. Instead he termed the program part of a continuation of streamlining efforts over the last two years at the world's largest automaker.

    "The impression I don't want to give is that this is some sort of emergency program post 9/11 because we're staring at a lower industry," he said. "It's really part of the ongoing slimming down of General Motors."

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      graphic CNNfn's David Haffenreffer reports on GM's early retirement program.

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    Lutz said the program will be completely voluntary and will be responsible for only part of the 10 percent reduction in salaried and contract staff in North America expected this year. The company's not looking at any voluntary separation packages or layoffs of younger salaried employees at the current time, Lutz said.

    The company has 47,300 salaried employees in North America currently. Lutz would not says how many early retirements the company expects. He said limits on salaried hiring will continue this year, and joked that his own hiring by GM last year was an exception to the rule.

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    "We are more efficient than we've been," he said. "We can't by any stretch of the imagination call ourselves the leanest, most efficient automobile manufacturer."

    Competitor Ford Motor Co (F: up $0.06 to $15.35, Research, Estimates). is expected to announce the layoff of up to 20 percent of salaried staff and some early retirement and voluntary separation packages for unionized employees later this week.

    Gary Cowger, president of GM North America, said he didn't see the need to have any early retirement packages for hourly employees. Ten of GM's 30 assembly plants are on eight-day shutdowns due to drop in sales of the vehicles they make, particularly to car rental companies. But some other plants, particularly those making light trucks, are working at the maximum overtime possible to meet current demand.

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    GM (GM: up $0.02 to $50.09, Research, Estimates) helped spark strong sales in the fourth quarter by offering a zero-interest financing incentive on all its models, a move that was widely followed by leading competitors. Last week it replaced that offer with $2,002 in cash back on almost all models, a program that runs through the end of February.

    Cowger and Lutz couldn't say if GM would keep the broad, across-the-board incentives in place when the current program expires, and will be weighing whether to offer incentives on other than fast-selling models.

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    "The big thing we learned [from zero-interest financing] was keep the message simple," Cowger said. "People tend to forget that there were lots of incentives in the marketplace out there by everybody, but they were quite confusing and all over the place."

    He said the zero-interest program was starting to lose some momentum, and only about 25 to 30 percent of buyers were taking advantage of it. He said that's why the $2,002 offer was made. graphic

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    GM CEO says estimates are too low - Jan. 7, 2002

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