In addition to its previously announced liquidity and capacity actions, GM is taking further actions to improve liquidity by an incremental $5bn by the end of 2009, it said on Friday.
The automaker is reducing capital spending for the calendar year 2009 from approximately $7.2bn to $4.8bn. The reductions will be achieved by retiming some vehicle programmes in North America and Europe by three to 12 months, and deferring capacity expansion projects.
Spending levels for the extended range electric Chevrolet Volt and other fuel-economy improvement initiatives to meet increasingly aggressive global fuel economy standards have been increased.
GM is also taking steps to reduce structural cost by an additional $1.5bn with measures such as further reductions in sales promotion spending, and dealer network support, and channel consolidations, and further revisions to production scheduling reflective of depressed industry conditions.
In response to declining demand, GM will re-rate operations at a number of facilities in North America to scale back production, beginning in the first quarter of 2009.
GM also expects to make further reductions in engineering expense due to the delays in capital spending. In addition, various types of discretionary spending, such as travel, use of consulting resources, and non-scheduled overtime for hourly and salaried employees, will also be restricted.
A number of working capital improvements, totaling approximately $500m, are also being taken, including additional inventory reductions, with an emphasis on further cuts in components, buffer stocks and finished goods.
Measures are also being taken to further reduce salaried employment costs in the US and Canada. The cost reduction target has been increased to approximately 30%, up from approximately 20% as announced on 15 July.
The reductions will be achieved with further contract and salaried headcount reductions by the recent over-subscription of a salaried staff retirement option, mutual separation programmes, and if necessary, involuntary separations.
Employment cash cost savings will also be achieved in western Europe in 2009 as part of its necessary, broad-based labour cost reduction initiatives.
Salaried employees will not receive enhanced variable pay (incentive compensation) in 2009 for the 2008 performance period. GM had previously announced there would be no discretionary cash bonuses for 2008 for the company’s executive employees.
In addition, GM suspended the company match for the stock savings (401k) plan in the US, effective 1 November (Ford announced likewise today) and matching contributions for tuition assistance and other reimbursement programmes are being suspended from 1 January.