GM slashes 30,000 jobs

General Motors has finally bitten the bullet and is to take what the company boss Rick Wagoner calls "tough medicine" to reduce its costs and return to profitability. The company is to close eight plants in North America and reduce its workforce by 30,000. The aim is to cut costs by $7bn over the next three years. The cuts will reduce the company's production capacity by around one million vehicles per year and will mean that the company will have almost a third of the number of employees it had in 1994. The company is struggling against competition and has watched its market share in the US drop from 44% in 1980 to 26% today. The job cuts will include normal attrition rates and early retirement plans. The announcement is a further blow to the power of the United Auto Workers union which has been on the run since the parts supplier Delphi went into Chapter 11 bankruptcy.

Despite all the problems GM has $19bn in cash at the moment although these reserves have been undermined by recent losses.

The part of Wagoner's plan which has not yet been revealed are the new products which are in the planning stages and new marketing plans to restore the image of the company as Toyota closes in in the fight to become the world's biggest automobile maker. One suggestion that has been heard in recent weeks - albeit only a whisper - is that GM might be considering an involvement in Formula 1 in order to brush up its image as a company that understands and produces high technology products.

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