Jul 15, 2008 - 11:00 AM

By Jillian Follert

OSHAWA -- Just six weeks after announcing Oshawa's GM truck plant will close next year, the company has come out with more bad news, revealing a series of aggressive cost-cutting measures aimed at saving $15 billion by the end of 2009.

At a news conference in Detroit Tuesday morning, GM chairman and CEO Rick Wagoner said rising oil prices and a spiralling U.S. economy are forcing the company to take further measures to adapt to market conditions.

One such step will be the elimination of white-collar positions in the U.S. and Canada later this year, through "normal attrition, early retirements, mutual separation programs and other separation tools."

No numbers or other details were announced.

GM Canada spokesman Stew Low did not immediately have specifics on how the announcement will impact salaried employees at GM Canada headquarters in Oshawa, saying he expected further information later in the day Tuesday.

Local employees were instructed to arrive at work early on Tuesday morning so they could listen to a broadcast of the 8:30 a.m. news conference.

In addition to the job cuts, Mr. Wagoner revealed health-care coverage for American salaried retirees over 65 will be scrapped as of Jan. 1, 2009, there will be no base compensation increases for Canadian and American salaried employees for the remainder of 2008 and 2009 and no annual discretionary cash bonuses for the company's executive group in 2008.

He said cuts to benefits and salaried jobs should save $1.5 billion in 2009 -- just one of several measures aimed at saving the company $15 billion by the end of 2009.

At the end of the first quarter of 2008, GM had a liquidity of $23.9 billion, with access to an additional $7 billion in credit.

A media release said the company has ample liquidity to meet its 2008 funding needs but is taking these additional steps to guard against a prolonged U.S. economic downturn.

However, rumours continue to mount, about the possibility of the company going bankrupt.

Wall Street has taken notice with GM stock price tumbling from a high of over $42 per share to under $10 per share -- the lowest value since 1954 -- at close of trade Monday.

"These are tough but necessary actions," Mr. Wagoner said. "And these, along with current cash and available credit lines will provide us with ample liquidity through 2009, even under conservative U.S. industry sales assumptions of about 14 million light vehicles in both 2008 and 2009 and continuing high oil prices."

Tuesday's announcement also outlined further adjustments to truck capacity and related component, stamping and powertrain capacity -- truck capacity is expected to be cut by 300,000 units by the end of 2009, half of which is from acceleration of previously announced actions, and the other half of which will stem from additional steps.

As well, the company will consolidate sales and marketing budgets, reduce its capital spending plan by $1.5 billion and suspend future dividends on common stock effective immediately.

"Our goal is not just to change GM's bottom line from red to black, which we're all working hard to do as soon as possible," Mr. Wagoner said. "Our goal is to change the company for the long haul. To structure GM for sustained profitability and growth, to set us up to be competitive for years to come."

Chris Buckley, president of Canadian Auto Workers (CAW) Union Local 222 in Oshawa, said he is deeply concerned by the news out of Detroit and wonders whether the CEO's comment that GM will consider "advancing the timing" of some previously announced cost-cutting moves, could lead to Oshawa's truck plant being closed ahead of the late 2009 time line.

"I'm extremely concerned that, based on what we've heard, Oshawa's truck plant could close sooner," he said. "If that happened, people wouldn't be prepared. It could have a devastating impact on the community."

Mr. Buckley was also alarmed by the plan to slash truck production by 300,000 units, guessing that the cuts would affect all truck facilities, including Oshawa.

He spoke with GM officials early Tuesday morning, but didn't have any concrete information on how the announcement would impact Oshawa -- he was hoping for details later in the day.

"This is going to be nothing but bad news for GM employees, both hourly and salaried," Mr. Buckley said. "I'm very nervous about what could happen in Oshawa."