In an email to General Motors' (STOCK QUOTE: GM) U.S.-based executives, CEO Rick Wagoner and COO Fritz Henderson warns that the automaker needs to make further workforce cuts, despite the fact that the number of employees who accepted early retirement packages in 2008 exceeded initial predictions.
They announced that they will "initiate involuntary separations in some areas of the business, late this year and early in 2009." The step is necessary, they say, to address the increasing need to conserve cash that GM has been burning through at $1 billion a month, a rate that is unsustainable. In the message, the GM leaders also outlined the compensation packages available to salaried employees to be released Thursday.
The compensation program will continue to offer health care for salaried employees with a Health Savings Account PPO, an enhanced PPO and Health Maintenance Organization (HMO) programs in certain areas. On a positive note, sickness and accident benefits will be increased significantly and life insurance benefits have also been increased.
There is no good news for retirees, who, as announced in July, will be losing coverage once they reach Medicare eligibility, including the special benefit for Medicare Part B worth $76.20 per month in exchange for a $300 increase in the pension.Additionally, Wagoner and Henderson say that there are changes to the salaried employee benefits including suspension of the stock savings match with effect from Nov. 1, delays in the timing of allocations of benefit allocations under the stock program and various other changes, including the salaried tuition assistance plan, effective Jan. 1, 2009.