GM closes under $3 - first time since '46

GM's best option: bankruptcy

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NEW YORK (CNNMoney.com) -- Shares of General Motors plunged another 13% on Tuesday to a 65-year low, closing below the $3 mark for the first time since 1946.

The stock closed Tuesday down 44 cents to $2.92, its lowest close since April 1943.

The Dow Jones industrial average component has lost nearly 40% of its value since Thursday. Shares began their slide on Friday when GM warned that it could run out of cash and posted a $4.2 billion loss.

On Tuesday, the battered automaker unveiled plans to idle nearly 2,000 hourly workers who build engines, transmission systems and body panels, during the first quarter of 2009, according to company spokesman Tony Sapienza. That reduction follows the news, disclosed Friday, that GM will idle another 3,600 hourly workers.

Making matters more complicated, GM will have to keep most of these hourly workers on the payroll during the current labor contract, which runs through September 2011.

The automaker is cutting salaried labor costs more efficiently. Last week it said it would cut another 10% of salaried employment costs, on top of a 20% cut in these costs that was already announced.

"We're taking appropriate measures to adjust production to what the market is saying it needs," said Sapienza.

As of Sept. 30, GM (GM, Fortune 500) had 123,000 workers in North America, down some 14% from a year earlier. Since the end of September, roughly 3,400 salaried workers opted for voluntary buyouts, bringing GM's total North American workforce closer to 120,000.

Jeff Embersits, chief investment officer at Shareholder Value Management and an owner of GM stock, said there's only one thing that can save the company: "The consumer needs to come out of the toilet and somebody needs to start buying cars."

GM said Tuesday that it was scaling back its presence at the Los Angeles Auto Show, scheduled for Nov. 19 and 20. Instead of unveiling its new Buick in California, GM said it will wait until Detroit's annual auto show in January.

Embersits, who owns GM stock, said the company needs to "cut itself in half" by continuing to shut down plants and reducing the number of car brands it makes. Otherwise, GM might be better off filing for bankruptcy, he said.

However, during GM's conference call following the release of its quarterly earnings report, Chief Executive Rick Wagoner said that the company wasn't ready to speculate about a potential bankruptcy.

GM is not the only struggling automaker. Ford Motor (F, Fortune 500) last week reported a $3 billion quarterly operating loss and outlined staff reductions. Ford said it planned to cut salaried labor costs by 10% and reduce its hourly staff, mostly factory workers, by 2,600 through voluntary buyouts.

President-elect Barack Obama, House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., are all pushing for a federal bailout of GM.