GM CEO Rick Wagoner. - File

General Motors (GM) Corp said, on Tuesday, it will lay off salaried workers, cut truck production, suspend its dividend and borrow US$2 billion to US$3 billion to weather a severe downturn in the United States market.

GM said the moves will raise US$15 billion to help cover losses and turn around its North American operations, including $10 billion from internal cost-cutting and $5 billion from selling some assets and borrowing against others.

"In short, our plan is not a plan to survive. It is a plan to win," GM chairman and chief executive officer Rick Wagoner said in a broadcast to employees.

GM's shares fell as much as six per cent to a new 54-year low of US$8.81, then rebounded to US$9.94 in midday trading, up 56 cents from Monday's close.

Reduce costs

Chief operating officer Fritz Henderson said GM wanted to reduce its total salaried costs in the US and Canada by more than 20 per cent.

A large chunk of the reduction, he said, would come from cutting health care benefits for salaried retirees over age 65. T.

hose people would get a pension increase from the company's overfunded pension fund to help compensate for Medicare and supplemental insurance, the company said.

Several thousand jobs will be cut through normal attrition and retirements, and through early retirement and buyout offers, Henderson said. The company could resort to involuntary layoffs, but does not want to, he said. GM has 40,000 salaried employees in North America.

Henderson said the company intended to reduce its truck-production capacity by 300,000 units, 150,000 more than it announced at its annual meeting in June.

The company will speed up previously announced closures of some truck and sport utility vehicle factories. GM said last month it would close plants in Janesville, Wisconsin; Oshawa, Ontario; Silao, Mexico; and Moraine, Ohio, but Henderson would not say which closures would be accelerated or when the closures would take place.

DIVIDEND SUSPENDED

The company also will make thousands of job cuts at other truck assembly and parts factories, Henderson said, but not whether more plants would be closed.

"These are going to be some pretty tough measures," he said.

GM also said it would suspend its US$1 per share annual dividend immediately, which will improve liquidity by US$800 million through 2009. It's the first time the company has suspended its dividend since 1922.

The company plans to raise US$2 billion to US$4 billion through the sale of assets, possibly including its Hummer brand. It also plans to borrow US$2 billion to US$3 billion by pledging assets, including stock of foreign subsidiaries, brands, stake in its finance arm and real estate.

Wagoner said the company likely would not seek that cash until 2009.