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GM set to cut thousands of jobs GM unveils job and cost cut plans
(about 2 hours later)
US carmaker General Motors (GM) is expected to announce thousands of redundancies on Tuesday as it seeks to cut its costs amid falling sales. US carmaker General Motors (GM) has announced it will cut salaried employment costs by 20% as it seeks to counteract falling sales.
This would be the second round of job cuts in six weeks and is likely to mean further cutbacks in sports utility vehicle (SUV) and truck production. GM also said it would sell as much as $4bn (£1.9bn) of assets, and borrow about $2bn to bolster its finances.
Recent record fuel prices have particularly affected sales of fuel-hungry SUVs and pick-up trucks. The largest US carmaker said it would also suspend its common stock dividend.
In the first half of 2008, truck sales sank 21% while overall sales fell 16%. GM and other carmakers are under pressure because of high fuel prices and a dip in demand for larger cars such as sports utility vehicles (SUVs).
GM is the US's top-selling carmaker, but this year its share price has plummeted by more than 60% as investor confidence in the company has fallen. In the first half of 2008, truck sales sank 21%, while overall sales fell 16%.
GM is the US's top-selling carmaker, but this year its share price has plummeted by more than 60% as investor confidence in the company has dissipated.
Difficult timesDifficult times
Last month GM announced the closure of four truck and SUV factories in North America and Mexico, and said it would increase production of smaller more fuel-efficient cars. Last month, GM announced the closure of four truck and SUV factories in North America and Mexico, and said it would increase production of smaller more fuel-efficient cars.
But this did little to reassure investors and last week GM's share price reached its lowest level in more than 53 years.But this did little to reassure investors and last week GM's share price reached its lowest level in more than 53 years.
Recently one US investment bank warned it was "not impossible" that GM would go bankrupt, although GM boss Rick Wagoner dismissed the forecasts as "not at all accurate or constructive".Recently one US investment bank warned it was "not impossible" that GM would go bankrupt, although GM boss Rick Wagoner dismissed the forecasts as "not at all accurate or constructive".
Some analysts have predicted GM will need to raise $15bn (£7.4bn) to ride out the downturn in car and truck sales.Some analysts have predicted GM will need to raise $15bn (£7.4bn) to ride out the downturn in car and truck sales.
GM says it has $31bn in cash which will be enough for this year without further borrowing. GM says it has $31bn in cash, which will be enough for this year without further borrowing.
But Wall Street says if GM does want to borrow more, it will have to make more progress in cutting its costs.But Wall Street says if GM does want to borrow more, it will have to make more progress in cutting its costs.
Fewer brands
Tuesday's announcement is likely to include widespread job cuts for white-collar workers, including engineers who would have worked on GM's now-cancelled range of next-generation SUVs and pick-up trucks.
There are also likely to be cutbacks at its truck components factories.
GM is also under pressure to streamline its output further and cut some of the eight different brands it currently produces.GM is also under pressure to streamline its output further and cut some of the eight different brands it currently produces.
Some analysts have suggested there is too much of an overlap between its different products.Some analysts have suggested there is too much of an overlap between its different products.
The firm has already said it is looking at selling its well-known Hummer SUV brand, but so far it has not released details of its plans for its other brands.The firm has already said it is looking at selling its well-known Hummer SUV brand, but so far it has not released details of its plans for its other brands.