GM and other automakers have been faced with some of the worst auto sales in the industry’s

February 11, 2009 at 12:00a.m.

GM and other automakers have been faced with some of the worst auto sales in the industry’s history.

STAFF/WIRE REPORT

Most salaried workers at the General Motors’ Lordstown complex will receive pay cuts under a new restructuring plan.

It isn’t clear whether any of them will lose their jobs in the cost-cutting effort.

GM said Tuesday that it will cut 10,000 salaried jobs worldwide and cut the pay of most salaried workers in the U.S. as it reworks its operations in the face of a government deadline.

GM said pay cuts will begin May 1 and continue at least through the end of the year, at which time they will be evaluated. The pay of U.S. executive employees will be cut by 10 percent, while other salaried workers will see cuts of 3 percent to 7 percent, GM said.

Tom Wilkinson, a GM spokesman, said plants have executive-level employees who will see the 10 percent cut, while salaried workers who are managers or supervisors will see cuts in the lower range. He said most workers in plants such as Lordstown would see pay cuts in the 3 percent to 7 percent range.

Some lower-paid salaried workers at plants will escape the pay cut, he said.

As far as job reductions, Wilkinson said some plants will see salaried jobs cut, but he couldn’t comment on specific plants.

He said the automaker will continue to staff areas such as electric vehicle development that it expects to be important going forward.

“The goal is to put our people in the areas that are critical to our future success,” Wilkinson said.

The job cuts that GM announced amount to 14 percent of its worldwide staff of 63,000. About 3,400, or 12 percent, of GM’s 29,500 salaried U.S. jobs will be eliminated.

Most of the cuts are expected to take place by May 1.

The company’s statement said there would be no buyout or early-retirement packages as GM had offered in the past, but laid-off employees will get severance pay, benefit contributions and other assistance.

GM’s plan also will include shuttering additional factories, according to people familiar with the plans.

GM faces a Tuesday deadline to present a plan to the government showing the wounded automaker can become viable.

GM has received $9.4 billion from the Treasury Department and expects to get $4 billion more, but the government can demand repayment March 31 if it determines the company can’t become viable.

Since October, GM and other automakers have been faced with some of the worst auto sales in the industry’s history.

Figures released Tuesday show that Mahoning Valley sales continued to be down in January.

Area dealers sold 1,458 new vehicles last month, compared with 2,657 in January 2008, said the Automobile Dealers Association of Eastern Ohio. Last month’s sales were up slightly from 1,344 vehicles sold in December.

Used-car sales last month also were down from a year earlier. Dealers in Mahoning, Trumbull and Columbiana counties sold 3,026 used vehicles last month, compared with 3,387 in January 2008 and 3,016 in December.

In its plan to Congress submitted late last year, GM said it would have to reduce both salaried and hourly positions so that the company could become viable for the long term. The company said it plans to reduce its total U.S. work force from 96,537 people in 2008 to between 65,000 and 75,000 in 2012, but it did not specify how many of the surviving jobs would be salaried or hourly.

GM has dramatically downsized both its salaried and hourly work forces in recent years. Since 2000, GM’s U.S. salaried work force has shrunk by 33 percent from its 2000 high of 44,000 people.

At the same time, the number of hourly workers has plunged by more than half — to about 63,700 people at the end of last year from 133,000 in 2000.

The company is required to show the government it can achieve “positive net present value,” which means that the present value of a company’s expected net cash flows exceeds the initial investment in the company.

The loan terms also require bondholders to swap part of the company’s debt for equity. The UAW also must make concessions that will reduce labor costs to the level of Japanese automakers’ plants in the U.S.

GM has yet to announce its fourth-quarter and full-year 2008 financial results, but analysts expect the automaker’s losses to total in the billions of dollars for both periods.

GM reported a $2.5 billion loss in the third quarter alone and said it burned through $6.9 billion in cash during that period, adding to urgent warnings that it would run out of cash without government aid.