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

December 12, 1991|By Doron P. Levin | Doron P. Levin,New York Times News Service Ted Shelsby of The Sun's Business staff contributed to this article.

DETROIT -- Leading the latest round of corporate shrinkage, General Motors Corp. signaled investors and employees yesterday that deep cutbacks were in the works. GM has been bleeding huge sums from its North American operations.

Robert C. Stempel, GM's chairman, said in a terse, three-paragraph statement that details of the cutbacks, which were endorsed by GM directors at a board meeting Monday in Washington, would be explained publicly next Wednesday.

The announcement came in reaction to rumors sweeping Detroit and Wall Street, a spokesman said, which had depressed GM's stock to a four-year low. GM closed yesterday at $27.875, down 62 1/2 cents.

Analysts have been speculating that GM will be forced to close several assembly plants, dismiss thousands of white-collar workers and, perhaps, reshuffle its executive suite. They have also been predicting a dividend cut in February.

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 over haul 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 but that other sites would be considered.

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.

GM's planned moves are expected to pare excess capacity and thus improve operating efficiency. The excess capacity has resulted from the prolonged automotive recession, as well as the company's failure to gain back any of the market share it lost in the 1980s. Personnel costs would also be lowered.

Most analysts estimate that GM is losing at least $500 million a month in North America. The deficits have been partly balanced by a strong performance by GM's non-automotive subsidiaries and big profits in Germany, where the Adam Opel unit is having a record year. Even so, GM posted a net loss of $2.2 billion in the first nine months of 1991.

Although GM remains financially strong, it cannot continue to lose such sums. Credit analysts say they are considering a downgrading of GM's bonds and commercial paper.

After the GM announcement, Standard & Poor's Corp. said it would "evaluate management's strategies for restoring the company's creditworthiness."

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