Nine more closures were disclosed by Jack Smith, GM's chief executive, bringing the total to 23 - two more than announced a year ago. But the charges and job-loss figures given yesterday are in line with the cost-cutting plan unveiled last December by the then chairman, Robert Stempel, who was forced out of office last month.
By 1995, GM, the world's leading car maker, plans to turn out a million fewer vehicles each year than it makes now, in what has been a desperate attempt to cut costs in North America by more than dollars 4bn a year.
'With these actions, we now have a plan in place to reach our production capacity of 5.4 million units by the mid- 1990s, which we believe to be in line with market demand for products,' Mr Smith said.
Since 1990, GM's automotive division has lost some dollars 16bn in North America, and continues to lose market share to its Japanese rivals and its two domestic competitors, Ford and Chrysler. GM, which produced one out of every two cars sold in North America 15 years ago, now makes one in three.
Mr Stempel, who harboured hopes of regaining GM's market dominance when he took the helm of the car maker in 1990, was told by its directors last spring that the company's North American operation must make a profit this year.
But last month the board, unhappy with the pace of the turnaround and facing rumours of a possible bankruptcy filing by GM, mounted a public coup against Mr Stempel, replacing him with Mr Smith.
GM will none the less lose dollars 1bn despite continuing profits from its operations in Europe and from its defence and data-systems subsidiaries. Sales are declining sharply in Germany and elsewhere in Europe, but analysts expect that the combination of the production cuts and recovering consumer demand in America should return the domestic division to profitability in 1993.
The nine plants are concentrated in the American midwest and north-east, and include two large assembly plants in Flint, Michigan, and Wilmington, Delaware, which together employ 8,000 people. The factories, one a car plant and the other a truck assembly facility, have been given no product assignments when the models they are now building go out of production at the end of 1995. Components plants in St Catherines, Ontario, in Canada; Sioux City, Iowa; and Livonia, Michigan, are to close next year. Accessory plants in Syracuse, New York; Trenton, New Jersey; and Euclid, Ohio, will also shut down next year, with the Ohio facility ceasing operations 'as soon as possible', GM said.
Mr Smith told a news conference that he had hoped to announce an employee buyout plan along with the closures, but the company was unable to reach agreement with the United Auto Workers trade union on the package. Officials of the union, whose current contract with GM does not expire until next September, said the retirement benefit plan would not be ready until Christmas at the earliest.
Analysts said there were no surprises in GM's announcement. 'General Motors appears to be right on track with the programme,' said Douglas Laughlin, analyst with Bear Stearns, the New York securities firm. He did note that GM would, ironically, have to introduce overtime work for its reduced workforce if demand recovered and it was able to maintain its 33 per cent market share.
'But that is probably a very optimistic outlook,' Mr Laughlin said.
Robert Eaton, former president of GM Europe, is to become chairman and chief executive of Chrysler on 1 January, succeeding Lee Iaccocca who is retiring.Reuse content