GM prepares to reveal cost-cutting measures Company expected to trim jobs, pay

December 12, 1991|By Donald Woutat | Donald Woutat,Los Angeles Times Ted Shelsby of The Sun's Business staff contributed to this report.

DETROIT -- General Motors Corp., suffering massive losses in its North American car and truck business, said yesterday that it will disclose another major retrenchment next week and take a big charge against earnings.

GM is expected to announce the elimination of thousands more white-collar jobs, cuts in executive pay and further plant closings, industry analysts said. There have also been rumors of a high-level management shake-up.

The pending actions were interpreted at the United Auto Workers union as setting the stage for GM to formally ask for relief from its expensive 1990 labor agreement, which has boosted labor costs twice as fast as expected.

With GM headed for the worst year in its history, cutbacks of some type have been hinted at for months. GM's failure to act sooner has sent the price of its stock tumbling to a four-year low on Monday and weakened its credit ratings.

Grey Terry, a GM spokesman in Washington, said it was too soon to determine the impact of the moves on the company's Baltimore minivan assembly plant on Broening Highway. "There's a lot of speculation and talk floating around," he said, "but we don't know what is in the cost-containment package."

Rodney A. Trump, president of Local 239 of the United Auto Workers Union, which represents about 3,400 hourly workers in Baltimore, said there was a lot of apprehension at the plant as workers awaited the details of the restructuring move.

Two years ago, GM said that when the Chevrolet Astro and GMC Safari vans undergo a major overhaul for the 1996-1997 model year, there is no guarantee the product would continue to be made here.

Kari Halsey, a spokeswoman for GM's Truck & Bus Group, said at that time that "Baltimore is high on the list of contenders" to build the restyled van.

Because Baltimore does not meet federal clean air standards, GM's plant would have to meet more stringent pollution standards here than in other parts of the country.

At the encouragement of Democratic Senators Barbara A. Mikulski, Paul S. Sarbanes and Congressmen Benjamin L. Cardin, D-3rd, Gov. William Donald Schaefer earlier this year established a task force to study the problems at the GM plant and look for way to preserve it.

Chairman Robert C. Stempel said yesterday in a statement from Detroit that the company's board has approved "major actions" to "improve profitability and cash flow in 1992 and beyond." The terse announcement gave no details, promising news would come next week.

GM said that the size of the charge against earnings is still under review but will be less than the $2.1 billion write-down GM took in November 1990, when it announced an earlier round of plant shutdowns.

Yesterday's statement was apparently intended to assure Wall Street that cost-cutting moves were forthcoming, but the lack of concrete details was itself unsettling, said auto analyst John Casesa at Wertheim Schroder & Co.

"They haven't said when or how much. Geez, you'd think after all this time, shouldn't the reviews be done?" he asked. Wall Street was not impressed by the announcement, and GM stock lost 5/8 to close at 27 7/8 on the New York Stock Exchange.

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