GM CEO Rick Wagoner announced this morning that the company will suspend its common stock dividend and cut white-collar employment costs by 20 percent in the newest restructuring to try and keep the company’s head above water.
GM will also sell up to $4 billion in assets and borrow at least $2 billion to help increase its liquidity by $15 billion through 2009, reports MSNBC.com. These moves should take away the speculation about bankruptcy.
By suspending the stock dividend, GM expects to save about $800 million. And by cutting white-collar employment costs, the company will cut some jobs, it will be suspending 2008 cash bonuses for executives and it will not fill any open positions. This will help the company raise about $10 billion in liquidity.
The asset sales should generate about $4 to $7 billion as well.
GM will also further reduce truck capacity, which means they might cut shifts and produce fewer trucks.
GM and its competitors have been hit hard by high gas prices, a weak economy and a consumer shift away from trucks and SUVs to smaller, more fuel-efficient vehicles.
GM’s overall sales were down 16 percent for the first six months of the year, and its truck sales were down an astonishing 21 percent.