GM says 19,000 U.S. factory workers take buyouts - Forbes.com

DETROIT (Reuters) - General Motors Corp (nyse: GM - news - people ) said Thursday about 19,000 U.S. factory workers -- just over a quarter of its American blue-collar work force -- had taken buyout offers to leave the automaker.

GM is under increasing pressure to cut costs in the face of weak U.S. sales and high gas prices, and analysts said the struggling automaker would have to quickly move beyond sweeping hourly job cuts by slashing production, eliminating white-collar jobs and trimming other costs.

All of GM's roughly 74,000 U.S. factory workers had been eligible for early retirement packages and buyouts intended to clear the way for hires of lower-wage workers under a deal negotiated last year with the United Auto Workers union.

"Despite significant challenges in the U.S. market, we continue to reshape our business for long-term success," Troy Clarke, GM's president of North American operations, said in a statement.

Like other Detroit-based automakers, GM has been hit hard by a U.S. auto market that has declined by a wider margin than expected and by a faster move by consumers away from gas-guzzling trucks and SUVs due to record gas prices.

GM's U.S. sales have dropped by almost 12 percent through April, a month that saw the industry's weakest sales in a decade. Analysts expect May sales to be as weak or weaker, with an even sharper drop in sales of more profitable trucks.

The weakening market has prompted Ford Motor Co (nyse: F - news - people ) to ready plans to cut white-collar jobs this summer and expectations are building that GM Chief Executive Rick Wagoner will use next week's annual meeting to unveil further cost-cutting steps.

"These restructuring plans look aggressive when they're announced, but it turns out that they're not aggressive enough," Argus Research analyst Kevin Tynan said. "The market is moving much faster than these restructuring plans are."

GM said most of the UAW-represented workers taking buyouts and early retirement offers, which ranged up to $140,000 in one-time payouts, would leave the company by July 1.

The acceptance rate for the cost-cutting program was lower than a similar offer GM made in 2006 for its union workers and broadly in line with expectations. More than 34,000 GM workers accepted similar buyouts in 2006.

UAW President Ron Gettelfinger said in February he expected fewer than 20,000 GM workers to accept buyouts.

GM, like Ford Motor Co and privately held Chrysler LLC, reached an agreement with the UAW that allows it to hire new workers for some jobs starting at $14 per hour, or about half the current average hourly wage.

GM said it would fill openings with existing workers where possible but would also hire new UAW-represented workers at that lower wage rate at plants where more workers are needed.

JP Morgan analyst Himanshu Patel said the buyout acceptance rate at GM was higher than he expected and could save up to $2 billion annually as the automaker cuts production.

But in a note for clients, he also said GM could take other steps that might include eliminating its dividend, salaried jobs and slower-selling truck-based models.

Ford saw about 4,200 UAW workers take a company-wide buyout offer. The No. 2 U.S. automaker, which last week abandoned its forecast for a return to profitability in 2009, is making plant-by-plant offers available in a bid to cut costs further.

GM shares touched a 27-year low this week. They rose 1.3 percent Thursday in New York Stock Exchange trade, but have dropped 25 percent since GM reported first-quarter earnings on April 30. (Additional reporting by David Bailey; Editing by Braden Reddall)

GM says 19,000 U.S. factory workers take buyouts - Forbes.com

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