GM signals more cuts

GM signals more cuts
Automaker will meet or top target to reduce salaried employment costs by 20%, but signals that additional cuts needed due to worsening sales.

NEW YORK (CNNMoney.com) -- General Motors expects to meet or exceed its target for a 20% reduction in salaried employment costs, but a letter to executives Thursday signaled that a worsening sales outlook will bring additional cost and staffing reductions.

The letter, sent out by Bill Tate, the head of human resources for GM North America, informed executives that GM (GM, Fortune 500) is taking some immediate steps to reduce costs. They include suspending its matching contributions to 401(k) as of Nov. 1, and also suspending tuition reimbursement and adoption assistance as of the end of the year.

Final numbers on the early retirement program announced this summer are not yet available, said GM spokesman Tom Wilkinson, as many who signed up are still within a window during which they can change their mind. The final figure is due on Nov. 1.

GM has 32,000 U.S. salaried employees, and since it has set a 20% cost target rather than a headcount reduction goal, it has yet to say how many employees it expects will be leaving the company under the program. The company has previously announced some changes in health insurance for salaried staff that will meet some of the cost cut target.

Given the continued contraction in sales in both North America and European sales, further moves to cut costs are likely, Wilkinson confirmed, including possible additional job reductions.

"We'll continue to assess our overall staffing needs," Wilkinson said. "Everybody in the business is looking at ways to tighten their belt."

GM's U.S. sales have plunged 18% so far this year, while European sales have also fallen.

No additional cost or headcount reduction target is spelled out in the letter. There was also discussion of a potential merger between GM and Chrysler LLC. Talks of a possible combination have been widely reported, but it is not clear such a deal will be able to be completed.

CNN