Trimming time

Detroit, Jan. 5 (Reuters): General Motors Corp will cut more jobs in 2007 as it closes plants and tries to wrench more concessions from its major union in contract negotiations, chief executive Rick Wagoner said on Thursday.

GM, which lost $10.6 billion in 2005, cut more than 34,000 jobs, unveiled plans to close 12 plants and reduce recurring costs by $9 billion in 2006. Wagoner said more limited job cuts were possible in 2007.

“I don’t rule out continued steps,” CEO Wagoner told reporters when asked about further cuts in 2007. “I think it’ll be a lot more through attrition than buyouts, but I wouldn’t rule it out. You won’t see major chunks ... but there is going to be a continued need to improve productivity, to be competitive and to cover things like health-care costs,” he added.

GM will also be looking for more concessions as it kicks off labour talks with the United Auto Workers Union this year, aimed at clinching a new four-year contract.

For GM, which has not faced a strike since 1998, the negotiations are expected to test a collaborative relationship with the UAW as the automaker seeks to unwind many of the costly obligations written into past contracts.

“Within a contract period, we’ve made a lot of progress,” Wagoner said of the past year. “But we are not fully competitive yet ... we need to make progress in the 2007 negotiations. These are tough issues ... and health-care has put us at a $5-billion disadvantage.”

GM’s health-care costs average $1,500 per vehicle, compared with about $200 for Japanese rival Toyota Motor.

“The structure we have doesn’t work in today’s global industry,” Wagoner said. “We’ve made some big moves, and I think it’s in everyone’s interest to make some more, so we can get to the position where positions can be added in the US rather than always being downsized.”

GM stock gained more than 50 per cent through 2006, but some analysts have said further gains hinge on the company’s ability to sustain profitability against increasingly successful competitors in a weak US auto market.