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Tuesday, November 22, 2005

Forbes.com - Magazine Article

Forbes.com - Magazine ArticleGM's Bumpy Road
Forbes.com staff, 11.21.05, 5:00 PM ET

In a desperate struggle to pull General Motors out of its financial slide, Chief Executive G. Richard "Rick" Wagoner Jr. said today that the company would lay off up to 30,000 workers, 5,000 more than previously announced, and close all or part of nine manufacturing plants to achieve $7 billion in cost reductions on a running-rate basis by the end of 2006--$1 billion above its previously indicated target.

The largest automaker in the U.S., GM (nyse: GM - news - people ) continues to struggle with foreign competition, deep pension and healthcare costs for its workers, and higher fuel prices, which have hurt sales of high-margin vehicles like SUVs.

Last week, after the automaker's shares fell to their lowest level since 1987, Wagoner said GM had a turnaround plan and a strong balance sheet, including $19 billion in cash and another $16 billion in a trust fund for retiree health care. But that cushion could vanish quickly if GM can't muster a turnaround soon. GM has lost $6 billion in North America so far this year and has been burning through cash at a rate of about $5 billion per year.

--From staff and wire reports

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