Yesterday, General Motors (GM) announced that it plans to cut expenses by a whopping $15 billion, though layoffs, voluntary buyouts, production slowdowns and salary freezes.
Among other cost-cutting measures, GM also plans to suspend its annual stock dividend of $1 per share and reduce health-care benefits for white-collar retirees who are eligible for Medicare.
A few weeks ago, GM announced that it was planning to close production plants in Wisconsin, Ohio, Canada and Mexico, to save $1 billion per year. Yesterday, the automaker indicated that, in addition to its newest cost-cutting measures, it will also accelerate those plant closings.
The struggling automaker finds it necessary to drastically cut expenses, because rising gas prices and a weak U.S. economy have adversely impacted its auto sales, particularly sales of GM pickup trucks and sport utility vehicles (SUVs).
The world’s largest automaker is not the only automaker feeling the crunch of rising gas prices and the reciprocal shrinking of gas-guzzler sales. For example, Ford recently announced white-collar layoffs for essentially the same reason.
Both automakers depend on sales of pickup trucks and SUVs to compete against smaller, more fuel-efficient imports. The weak U.S. economy has compounded their cash flow problems from rising gas prices, by adversely impacting sales of other GM and Ford vehicles too.
GM anticipates that U.S. auto sales will continue to shrink industry wide in 2008, to their lowest levels in over a decade. The automaker expects the trend to continue into 2009.
If you become unemployed due to a layoff or plant closing, then you might be eligible to collect unemployment benefits from the state unemployment office. You might also be eligible to continue your health insurance coverage under your employer’s group plan, through COBRA. To look for a new job, start at Job Search.