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GM CEO refutes job cut report
CEO Wagoner say GM plans no layoffs; says attrition should cut U.S. staff less than reported 7%.
January 10, 2005: 12:50 PM EST
By Chris Isidore, CNN/Money senior writer

DETROIT (CNN/Money) - General Motors Chairman and CEO Rick Wagoner denied a published report Monday saying the automaker plans to cut 8,000 jobs, or 7 percent, in its U.S. division over the next 12 months.

The Detroit Free Press quoted Wagoner as saying that attrition and retirement should lead to a 7 percent reduction of overall work force at GM (Research), which he said is in line with what the company has done every year since 2002 in a bid to trim costs amid rising health-care expenses and other concerns.

But at the North American International Auto Show here, Wagoner told reporters that the 7 percent figure quoted in the newspaper was not his number. Wagoner said the number was closer to 5 percent for hourly workers, most of whom are represented by the United Auto Workers union, and about 2 percent for salaried workers, who are generally members of management.

"This is a continuation of what's been going on for several years," he said. "We think this is business 101."

Figures from GM shows than in the 12 months ending Sept. 30, U.S. hourly work force declined by just less than 6 percent to 112,000, while salaried work force fell by 5 percent to 38,000. That left total U.S. employment down about 9,000 from the same point a year earlier, not counting contract employees, who are also seeing their numbers reduced.

If 2005 produces the same attrition rates in the two work forces, total U.S. employment at the company would likely fall by just over 8,000 by the end of 2005. Even if the salaried attrition rate is closer to the 2 percent mark Wagoner mentioned, total employment would likely decline by more than 7,000 fewer employees.

One thing that could limit GM's job decline this year is a restructuring at its former parts unit, Delphi Corp. The world's largest auto parts maker announced in December that it would cut 8,500 jobs worldwide, with 3,000 of those positions being among its' U.S. hourly staff. Many of those affected U.S. employees have the rights to return to open positions at GM under their union contract. It is not clear how many will make the move at this time, though.

Wagoner said GM's older hourly work force, with an average age of about 50, is the reason for the higher attrition rate than the salaried staff. And while he said while many retirees' positions would be unfilled, GM would be doing some hiring to replace a fraction of the departing employees.

On average, GM each year has eliminated about 2 percent to 3 percent of its salaried workforce, 5 percent to 6 percent of its hourly work force and about 10 percent of its contractors as GM employees or contractors quit or retire and aren't replaced, the Detroit Free Press said.

"That's about what it was in 2004. We're not exactly sure about 2005, but we don't think it will be any different than last year, or what it has been in 2002, 2003 and 2004," Wagoner was quoted as saying.

Won't concede world lead to Toyota

In other comments, Wagoner said GM is not conceding it will lose the title of the world's No. 1 automaker to Japan's Toyota Motor Corp. (Research) in the coming years, as is Toyota's sales target. GM had worldwide sales of 8.98 million vehicles in 2004, which was up 4.2 percent. Toyota's worldwide sales were 7.47 million, but it posted a 10 percent growth rate.

"The game is going to be played on who does the best product and gets in the right segments and the right markets," he said. "I think there's a dynamic change being played out. I think that's why we have to get in the growth markets. The good news is we have the leading markets share in those (nine growth) markets if you add them all up and we are up more than anyone else there last year."

Wagoner said he is also confident that GM can halt its recent U.S. market share decline of the last two years. He said the roll out of some large-volume vehicles such as the Chevrolet Cobalt and the Buick LaCrosse should help sales grow in 2005, even as GM struggles with an older lineup of some key products, such as full-size pickups and sport/utility vehicles.

"Our opportunities are clear. About 20 to 25 percent of our vehicles should be new product in 2005. In 2004, it was more like 10 to 12 percent," he said. "We can grow (U.S. market share) and we're certainly going to try."  Top of page


-- CNN/Money's Parija Bhatnagar and Katie Benner contributed to this report.




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