GM Cuts Jobs, Truck Production


GM president and chief operating officer Fritz Henderson confirmed Tuesday what most have thought for some time.

"When the price of oil tops $145 a barrel, it's obvious the shift in mix from full-size SUVs and pickup trucks is permanent," he said. "We can't wait for conditions to improve to ensure survival and success. It's time to react by going to where the customer is going and not where he just left."

With that, GM detailed plans Tuesday to cut costs in order to generate about $15 billion in cash through the end of 2009 to ensure ample liquidity to survive even if industry sales continue to slide and gas prices continue to rise.

GM said it has doubled the number of trucks and SUVs it will remove from production plans by the end of 2009, taking that number up to 300,000 units. GM wouldn't specify which plants will be affected until after it meets with the UAW.

"We're retreating from trucks but protecting cars and crossovers," GM vice chairman Bob Lutz said. "Our goal is to adopt technology to become the fuel-economy leader in every segment we participate in in the future."

So don't look for trucks or truck-based derivatives, but rather for high-mileage cars and car-based crossovers to fill showrooms.

How will GM make a profit selling low-priced economy cars rather than big SUVs and trucks?

"Why haven't we made money on small cars?" Lutz said. "Because with gas at $1.25 a gallon no one wants small, they want big cars with V-8s. But you'll see profits on small cars go up as volume goes up."

GM chairman Rick Wagoner said the automaker will also cut capital spending by $1.5 billion by the end of 2009, though the cuts will come from deferring next-generation pickups and SUVs, as well as a V-8 engine program, so cars and crossovers won't be shorted a dime.

To ensure GM has ample liquidity, it will also cut sales and marketing programs, though Troy Clarke, president of GM North America, wouldn't elaborate on that other than to say GM would cut spending on promotional events and motorsports. Asked if GM would abandon such things as NASCAR, he replied that GM has "given scrutiny to modifications in our promotional footprint."

Wagoner also said GM continues to shop its Hummer brand around, and that there's been "lots of interest," but nothing to report yet. As for disposing of other assets, like other GM brands, Wagoner said GM is committed to finding ways to boost profits of other brands, not dispose of them.

In addition to cutting truck and SUV production, GM said other sacrifices to ensure it has the dough to survive include halting common-stock cash dividends and doing away with cash bonuses to executives. It will also halt medical coverage to retirees over the age of 65, who will now have to use Medicare.

By Jim Mateja | July 15, 2008 | Comments (15)
Tags: In The News


It hasn't been a $1.25 a gallon since 1999. Lutz makes the comment like gas went from $1.25 to $4.50 in one year. Sorry Bob but it's been 9 years in the making. Get out from under your rock.


too little too late for gm. No brands being killed, no specific models being killed. Gm needs radical overhaul to survive. I dont really think that they get it still. They said they get it, but cutting workers and truck production only is not enough. Gm needs to be making cars which people want to buy, and the clock is ticking. They are capable of making vechicles people want, such as enclave, cts, and mallibu, but they MUST cut the waste and the extra bloated brands. Gm to me is like a bloated balloon, and they need to release 90% of the air, but they release like 5% of the air at a time. A scared company is a dead company.

Troy S.

I'm tired of people slamming GM. Let's give them some credit here. They are trying to save thier company, bring to market what the consumer wants and needs.

This is not an over night process and then thier's the employee issue as well. Given time, I beleive GM will bounce back. They will be stronger, leaner and smarter.

They built what we wanted so, who's to blame here? Us.


troy, gm was behind in the times. They failed to see and read the marke tand basically mailed in the small and mid size car market for so long so that when the market turned there they were not ready. As a result, even with the mallibu, which is at least worth a look, people arent trained to look at it and their other choices they offer. Why should be give them credit?


they are overcharging period. thats why they are failing. lower quality, higher prices.

If they really want to sell cars, clear out their lots. low interest, low prices. look at Scion. loaded vehicles for under 20 grand.

Gm you need to buy ABS/traction control/VSC on almost all their chevy cars.


Now is the time to buy GM stock. With these moves the company will definitely survive, the stock price will rise and they'll restore the dividend. Our 2008 Silverado with the cylinder deactivation feature delivered an average of 25.1 mpg on a 280 mile trip. Under the worst conditions it still gets over its EPA estimate of 20 mpg. We've owned Toyotas, but couldn't resist the fact that the Silverado was $10,000 cheaper than the Tundra, rides better and has flawless build quality. With improved vehicles like that you can count on a turnaround for the General.


how can you say "give gm credit"? we all realize that they didnt see the writing on the wall. alot of automotive companies refused to see it. the smart companies, ie. toyota and honda, saw it and are doing ok at the moment. i dont feel bad for GM or for chrysler for that matter, they refused to change their image when they could have, and now may have to pay a heavy price for that mistake.


GMs problem is that they put too much emphasis on the truck sector. Toyota diversified their portfolio nicely and if tomorrow small cars out and large in, here we go - Toyota has nice lineup of 5-6 trucks. Today they have 6-7 small cars. GM has basically 2 small cars and they are not too attractive.
This is why Toyota is so popular. You have quality and you have choice!

Another reason toyota and honda have done well is that they have limited their models to about 10-12. They've produced about one vehicle per class or type and they stick with those vehicles and just update them periodically. The buying public get used to seeing the same models and there's a brand identity. Whereas GM is all over the place with several models of the same vehicle and are always introducing and discontinuing models every other year. There's no consistancy for the consumer.


GM is having problems with the transition from suvs to small cars and hybrids!! oh and they have to much competion from toyota and honda


I wouldn't call Toyota lineup limited. Honda - yes.
Without their Luxury brands
Honda has 9 vehicles, Toyota-16 + 3 Scions.


Again GM got caught with it's pants down. Days of sympathy for any US company are long gone. There's too much competition in the car market, and the consumer only cares about the best car for the buck. GM should have been more flexible and realized that car buyers will jump any direction, depending on the economy and gas prices. This time the consumer is demanding cars with good MPG, yet GM wasn't prepared for this. GM is learning yet another hard lesson. The only people I feel sorry for are GM's workers. They are caught in the middle and must rely on GM's overpaid leadership. GM is a company that has and will continue to lose market share. They should focus on building good cars that get great MPG. By the time this is done the consumer will have already bought a Honda, Toyota, or Hyundai, leaving GM in the dust.

Tony -
Yes toyota has 16. But that 16 is still much easier to manage than the 40+ that GM has.


Having more models and versions of the same car is not necessarily a bad thing for consumers. Our Prius is usually joined in a parking lot by several others that are the same color. I guess exclusivity is not part of the bargain when you buy a Toyota. I've read that next year the new Prius will spawn a Lexus version, so Toyota would seem to be taking a page out of GM's book.


Credit to GM?

Why are we given crappy cars to begin with?
They just didn't care back when the gas was less than a buck per gallon.
They still didn't care when the gas jumped over two bucks per gallon.
Finally decided they need better mid-sized cars when gas was three bucks per gallon. But still wasted money on building those gas guzzlers just because those things make more money than cars.
Now they finally wake up from their daydream of gas price will fall back eventually.
Credit to them?

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