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According to Wall Street Journal General Motors plans on removing about 5,000 employees by November 1 as a part of its cost-cutting strategy. The Detroit giant’s total revenue is expected to fall about 3% in the quarter and an operating loss of $1.49 billion as GM relies on strong international operations to offset bleeding in North America. The head count move is part of a 20% reduction GM plans for its North American white-collar cost structure this year. It plans to shave $10 billion over the next 17 months. GM will also suspend the dividend, cut capital spending and trim retiree benefits to meet its target.
GM hopes the early-retirement incentives will persuade workers to leave voluntarily. The company is expected to roll out offers soon that will include both cash incentives and the chance for some to leave early with full pension benefits. GM has cut its white-collar work force 40% since 2000, to about 32,000 employees.
The auto maker also confirmed plans to scale back its vehicle-leasing operations, which could further crimp U.S. sales. While GM plans to continue to offer subsidized leases in the U.S., it is adjusting some of the lease terms and will exclude certain vehicles. GM is likely to have lease-related losses of its own when it reports earnings. A glimpse of the extent could come Thursday when GMAC LLC, its financing unit, reports. Lehman Brothers estimated Tuesday that GM had a $2.45 billion loss in the quarter. As of March 31, GM had $24 billion on hand. GM has a plan to shore up liquidity by $15 billion by the end of 2009 by implementing the $10 billion cost-cutting plan and raising $5 billion through asset sales and collateralized loans.
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