More than a quarter of General Motors' gm hourly workers are expected to leave by the summer as a result of a recent buyout and retirement offer, the company announced Thursday amid reports that Chairman and CEO Rick Wagoner will announce additional restructuring measures at its annual meeting next week.
The move comes as automakers are scrambling to cut costs and adjust production plans amid to high gas prices and the weak economy as U.S. buyers shift away from trucks and SUVs to smaller more fuel-efficient vehicles.
GM said 19,000 of its 73,000 hourly workers have signed up for buyouts and retirement offers. Workers will be expected to leave by July.
While the number leaving is far higher than that of a similar program at Ford Motor f earlier this year, it is a bit below the number GM targeted under its special attrition program offers, also called the SAP, according to the Center for Automotive Research in Ann Arbor, Mich.
"We had hoped that 20-25,000 would take the SAP at GM — setting up at least 12,000 hires this fall," said Sean McAlinden, chief economist at the center. "I think GM assumed this also. So GM is much closer to its target than Ford."
Ford saw about 4,200 take its offers, but he said, had hoped to entice 10,000 hourly workers to leave.
Both automakers had hoped to use the buyout and retirement offers to move its older workers off their payrolls. Both automakers say they have more workers than they need given the growing competition and their shrinking market shares in the United States.
In other moves:
•Honda will meet growing U.S. demand for small cars while maintaining North American jobs by moving production of two bigger models from Canada to Alabama and increasing production of smaller Civics in Canada, Chief Executive Takeo Fukui said Thursday.
•Hyundai says it may make small cars at a plant being built in the United States by its affiliate Kia Motors.
•Ford confirmed this week that it is looking at involuntary layoffs of salaried employees, perhaps as many as 2,000. Ford said earlier this month that it would cut North American production 15% in the second quarter, 15% to 20% in the third quarter and 2% to 8% in the fourth quarter, primarily affecting pickups and sport-utility vehicles.
McAlinden said GM had hoped to have enough workers take the buyout and retirement offers that it could not only trim its workforce but also take advantage of a clause in the most recent UAW contract that allows the automaker to hire new workers at a lower hourly wage and with a lesser benefits package.
"This attrition program gives us an opportunity to restructure our U.S. workforce through the entry-level wage and benefit structure for new hourly employees," Troy Clarke, president of GM North America, said in a statement. "We appreciate the UAW's support in making business improvements that provide a more secure future for General Motors and its employees.
GM's latest buyout brings to about 53,000 the number of hourly workers the automaker has cut in the past two years as part of a North American turnaround plan that has cut $9 billion in fixed costs, but has yet to return the automaker to positive cash flow or profitability.
In light of those struggles and mounting pressures from rising gas prices, a weak U.S. economy and a rapid and ongoing shift in consumer preferences to cars and crossovers from large trucks, Wagoner is expected to unveil a restructuring plan at the automaker's annual meeting on June 3 in Wilmington, Del.
GM spokeswoman Renee Rashid-Merem wouldn't comment on those reports, saying only that, as in past annual meetings, the chairman will review the state of the business with stockholders and outline what the company is doing to ensure future success.
People familiar with the planning said the latest restructuring measures are likely to include production cuts for pickups, large SUVs and midsize trucks and news of increased production for its cars and crossovers.
Those people confirmed for the Free Press the details of a Wall Street Journal report that said the measures were being discussed with the board and were expected to be made public Tuesday.
The news comes on the heels of the news that Ford will cut 2,000 to 3,000 salaried jobs in North America as the automaker adjusts to rising steel and oil prices that have pressured its truck-heavy business. McAlinden said financial markets are demanding rapid action.
"GM MUST cut light truck capacity," McAlinden told the Free Press in an email.
GM still has the capacity to build 1.7 million of its largest vehicles, from Escalades to Silverados, in North America, McAlinden said. "They probably only need 1 million units at most due to the structural change in the market. ... So, we worry. Pontiac East, Flint Truck & Bus, they are all at risk."
GM already announced this week that it is speeding up the elimination of a shift each at those pickup plants, even though they had been down for weeks because of the UAW's strike against American Axle & Manufacturing, which supplies those factories. The latest announcements leave them each with just one shift. It is considered inefficient and costly to operate plants with just one shift.
GM executives said during a recent presentation to bankers that they were taking rapid measures to shift production to cars from trucks on the belief that the changes in the North American market to smaller, more fuel-efficient vehicles were permanent, rather than cyclical.
At Honda, the Pilot sport-utility vehicle and Ridgeline pickup, now rolling off its plant in Alliston, Ontario, will be produced in Lincoln, Ala., allowing production of the Civic sedan to be increased in Canada, Fukui said Thursday.
"Gas prices continue to rise, and the demand for cars with good mileage is growing," Fukui told reporters at a Tokyo hotel. "Efforts are underway to increase the local production of the Civic."
Honda's production changes won't create — or cut — any jobs in North America. But Fukui noted it will maintain sales momentum.
"And the point is we won't have to reduce employment," he said.
Honda will create American jobs when its plant to build Civics opens in Indiana later this year. That plant, Honda's seventh in North America, is expected to add about 2,000 jobs.
Fukui said Honda's Fit subcompact is another model that is emerging a hit in the U.S., a nation previously known to favor gas-guzzlers.
Still, the overall U.S. auto sales are expected to drop to around 15 million vehicles this year — down from 17 million as recently as 2005.
Relatively new auto plants are flexible in production, allowing models to be switched to respond to shifts in demand. At some plants, the same assembly line can produce different models, one after the other.
At Hyundai, Vice Chairman Kim Dong-jin told reporters earlier this month, "We might have Hyundai products produced at (Kia's) Georgia plant if the platform is common."
Kim's comments were contained in an e-mail from Hyundai on Thursday.
The Kia plant, in West Point, Ga., is set to open in late 2009 with annual capacity of 300,000 vehicles.
Earlier this month, Hyundai said it had considered making pickups at the plant in Georgia but decided against the idea because of high oil prices and slack truck sales in the United States.
Kia, meanwhile, said that its next generation Sorento SUV will be the first model to go into production at the Georgia factory.
"Additional models to be produced at the Georgia plant following the Sorento have not been finalized," Kia spokesman Michael Choo said Thursday.
Hyundai has a factory in the neighboring state of Alabama.
Hyundai and Kia together form the world's sixth-largest automotive group.