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GM extends deadline for white-collar buyout offers

General Motors Corp. has extended its deadline for white-collar workers to accept buyout and early retirement packages and says involuntary layoffs are possible as the automaker continues cost-cutting efforts.
/ Source: The Associated Press

General Motors Corp. has extended its deadline for white-collar workers to accept buyout and early retirement packages and says involuntary layoffs are possible as the automaker continues cost-cutting efforts.

Company spokesman Tom Wilkinson said Wednesday the deadline has been extended for a week beyond the original Nov. 1 deadline with the hope that more workers will take the offers and reduce the number of involuntary cuts expected to come.

An internal memo sent to GM executives Oct. 23 confirmed that salaried job cuts beyond those related to the packages are probable, Wilkinson said, in part because industry conditions have worsened since GM announced the planned reductions in July.

"Even if people accept, I think we will probably look at some involuntary separations, sometime either at the end of this year or next year," Wilkinson said. "We haven't been specific about numbers or timing."

The packages, according to employees, include sweetening benefits by adding some years to the workers' age for pension purposes. Cash bonuses amounting to part of a year's salary also have been offered.

GM said in July that it plans to cut about 5,100 salaried jobs in the U.S. and Canada as part of its goal to slash white-collar costs in those countries by more than 20 percent.

The company said last week it will stop company matching of salaried employees' 401(k) contributions, and it also will suspend some benefits such as tuition reimbursement and adoption assistance.

Since the July announcement, auto sales worldwide have declined due to slowing economies, tight credit and a lack of consumer confidence. For the first nine months of this year, GM's U.S. sales were down 18 percent, while the overall market was off 13 percent. October U.S. sales are expected to be worse than September, which was the worst sales month in 15 years.

GM, which is burning through cash at a rate of more than $1 billion per month, announced a plan in July to boost its cash position by $15 billion, with $10 billion in internal costs cuts and $5 billion through borrowing and asset sales.

The automaker has lost $57.5 billion in the past 18 months, although much of that comes from noncash tax accounting changes.

Industry analysts have said that at the current spending rate, GM's cash pile could fall to between $11 billion and $14 billion — the minimum amount needed to run the company — sometime next year. Analysts expect further cost cuts and other measures when GM announces its third-quarter earnings in the coming weeks.

GM's cuts are part of a multiyear downsizing as the company struggles to adjust to its shrinking U.S. market share. GM had 32,000 U.S. salaried workers at the end of last year, down from 44,000 in 2000. Meanwhile, the company's U.S. hourly work force dropped by more than half to 57,000 last year, and an additional 19,000 hourly workers took buyouts last summer. The company recently announced plant closures and shift cuts that will bring 4,300 indefinite layoffs.

GM shares rose 51 cents, or 8.2 percent, to $6.76 in Wednesday trading.

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AP Business Writer John Porretto reported from Houston.