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GM begins round of white-collar layoffs

General Motors Corp. began firing 1,600 white-collar workers Monday and Fiat’s CEO left Italy to resume critical talks on an alliance with Chrysler LLC.
/ Source: The Associated Press

General Motors Corp. started firing 1,600 white-collar workers Monday, continuing its effort to slash costs and qualify for more government loans on the same day it revealed it spent $2.8 million in the first three months of this year to lobby federal lawmakers.

Meanwhile, Fiat’s CEO left Italy to resume critical talks on an alliance with Chrysler LLC, as deadlines draw closer for GM and Chrysler to finish their restructuring plans.

Both automakers are living on a combined $17.4 billion in government loans and have said they’ll need more money to survive. Chrysler must cut its debt and its labor costs and forge an alliance with Fiat Group SpA by April 30, or President Barack Obama says Chrysler won’t get any more help.

If GM can swap much of its debt for stock and get concessions from the UAW and Canadian Auto Workers by June 1, the government says it will provide more loans to keep the company going. Bankruptcy financing also is possible if the company determines Chapter 11 is its best bet to achieve the cuts it needs.

GM’s layoffs this week bring the automaker close to its goal announced in February to cut 3,400 U.S. salaried positions, spokesman Tom Wilkinson said. GM has about 29,000 salaried workers in the U.S.

“In these unprecedented times, GM is reinventing every aspect of our business, including our organizational size and structure, to create a lean and agile company,” GM North America President Troy Clarke said Monday in an e-mail to employees obtained by The Associated Press.

Meanwhile, GM said in a government filing that it spent $2.8 million in the first quarter lobbying the U.S. government on a range of issues, including the economic stimulus package, and environmental, consumer safety and health issues.

“We’re a part of arguably one of the most regulated industries and we provide a voice in complex policy discussions,” GM spokesman Greg Martin said.

GM’s lobbying costs fell 15 percent from the $3.3 million it spent in the fourth quarter of 2008, but they rose from the $2.7 million GM spent in the third quarter.

Chrysler and its parent company Cerberus Capital Management LP together spent just $550,000 lobbying during the first three months of this year, according to government filings. That’s down more than 75 percent from what the two spent during the last three months of 2008.

GM has said it will eliminate 47,000 jobs worldwide by the end of 2009, but the cuts may go even deeper as the company moves toward its deadline. CEO Fritz Henderson has said the automaker will close more factories beyond five announced in February. The factories to be closed have not yet been identified.

“There is no question, as we look at our revised plan to go deeper and go faster in our operational restructuring, there will be further reductions in manpower, people, that are going to affect communities, affect plants and people, both on hourly and the salaried side of the business,” Henderson told reporters Friday.

For GM to qualify for more government aid, the UAW must agree to take stock for part of the roughly $20 billion that GM owes to a union-run trust that will cover retiree health care costs starting next year. The UAW and CAW also must agree to cut labor costs.

GM must also persuade the holders of $28 billion in GM bonds to take stock in exchange for part of the debt.

For Chrysler, the next few days could be critical. Fiat CEO Sergio Marchionne arrived in the U.S. Monday to try and finish alliance talks with just over a week to go. The companies are discussing a deal that would give Fiat a 20 percent stake in the Auburn Hills, Mich., automaker in exchange for Fiat’s small-car technology.

The CAW was scheduled to resume negotiations with Chrysler on Monday night, and CAW President Ken Lewenza seemed to soften his stance against deviating from a deal inked last month with GM.

Lewenza said the situation is “shifting enormously” and he’s still waiting to see the outcome of negotiations between Chrysler and the UAW.

Meanwhile, the UAW told members and supporters in a mass e-mail Monday to contact the White House and “insist that workers and retirees must be treated in a fair and equitable manner in any restructuring plans.”

“We need President Obama and his auto task force to stand up for the interests of workers and retirees in these restructuring negotiations,” the e-mail said. “Please call or e-mail President Obama right away on this critically important issue.”

White House spokeswoman Amy Brundage said in an e-mail that the auto task force “will continue to have an open door through this process and will continue to hear the views of all the stakeholders involved.”

Although the backing of the UAW and other unions was key to President Barack Obama’s election last fall, he nonetheless has called on the union to accept deeper concessions so the Detroit Three can better stand up to the foreign competition. Japanese and European automakers generally have lower labor costs and a nonunion work force at their U.S. facilities.