GM Offers Early Retirement to Some Non-Union Workers

Detroit March 20, 2005; John Stebbins writinfg for Bloomberg reported that General Motors Corp., the world's biggest automaker, has offered buyout and early retirement packages to some of its non-union, salaried workforce in North America as the company grapples with cutting costs.

The offers were sent in the first quarter in hopes of speeding the ``normal'' amount of attrition the company usually has, said Toni Simonetti, general director of financial and international communications, in an interview.

The company has 40,000 white-collar workers in North America, Simonetti said, ``and there are areas in the organization that have a greater opportunity to reduce numbers than others.''

GM is under pressure to shutter plants and renegotiate union contracts. Its bonds fell last week to the lowest levels against government debt since at least 2001 after the company forecast its biggest quarterly loss in 13 years. The Detroit-based company is the third-biggest corporate-debt issuer.

The company hasn't targeted a specific number of people it hopes will participate, Simonetti said. In 2004, the company had 324,000 workers worldwide and a payroll of $21.5 billion, according to a company filing.

Losing Buyers

Earlier today, the online edition of the Wall Street Journal reported the packages and said the cuts may go as deep as 28 percent in certain ``functions,'' a number that Simonetti declined to confirm.

``It (the reductions) will vary from department to department,'' she said.

The program to reduce non-union headcount ``is winding down,'' Simonetti said. She declined to comment on other steps the company might take if the number of people leaving the company voluntarily is not enough.

The company, a corporate icon once synonymous with American industrial might, continues to lose buyers to Japan's Toyota Motor Corp. and Hyundai Motor Co. even as it offers the industry's highest rebates. Standard & Poor's Corp. has lowered its outlook to negative and said GM's hold on its investment- grade rating is ``tenuous.''

With U.S. sales this year headed for the lowest market share in 80 years, GM is finding it tougher to cover rising health-care costs for its 1.1 million employees, retirees and dependents and pay for increased costs for steel and other materials.

``The company has $5.5 billion in health-care costs,'' Simonetti said. ``That is something that we have to look at.''

GM said on March 16 it expects a first-quarter loss of about $1.50 a share and forecasts a 2005 annual profit of $1 to $2 per share, less than the Jan. 13 forecast of $4 to $5 a share. Falling U.S. car and truck sales prompted the automaker to deepen cuts in both first-quarter and second-quarter production by 10 percent or more.

GM, which controlled 51 percent of the U.S. market in 1962 and once feared antitrust action by the U.S. government to break it into smaller units, may finish the year with less than 25 percent of the market for the first time since 1925.

Shares of General Motors rose 27 cents to $28.62 on Friday. The stock is down 29 percent year to date.

To contact the reporter on this story: John Stebbins