The focus of today’s announcement were actions to bolster GM’s cash reserves by $15 billion over the next 12 months. GM confirmed it would further reduce structural costs and generate cash to avoid the chance of bankruptcy.
Some of its strategies include further salary-staff job cuts in both the U.S. and Canada, the elimination of health care coverage for U.S. salaried retirees over 65, fewer cash bonuses, reduced dividends, and reduced income increases. Further costs savings are expected from reduced truck production, with volumes expected to be reduced by 300,000 units by the end of next year.
In addition, GM will reduce and consolidate sales and marketing budgets, and keep engineering budgets at 2007 levels. Other initiatives include reduced capital spending, which are related to the delay of the next-generation large pickup and SUV program, and luxury V8 program.
Spending for non-product programs will also be significantly reduced, while powertrain spending will be increased to support the development of alternative propulsion and fuel economy technologies and small displacement engines. Finally, GM will investigate selling some of its assets, including plants and office buildings, to raise further funds.
At the end of the first quarter, GM still had liquidity of $23.9 billion, with access to U.S. credit facilities of an additional $7 billion. Combined, the actions announced today are expected to bolster liquidity by approximately $15 billion.
Last month Wagoner revealed the first set of restructuring plans for North America, which included the confirmation of a new compact sedan, new four-cylinder engine family and a review of the Hummer brand.