General Motors Corp. will trim about 3,600 North American staff, including 500 in Canada, as the auto giant grapples with a major third-quarter loss, which it released Friday.
The auto giant said the layoffs will come early next year as GM reports a net loss of US$2.5 billion this quarter, which were blamed on shifting market trends and a struggling global economy.
The numbers were seen as "reflecting rapidly deteriorating market conditions in the U.S., slowdowns in other mature markets around the world, and continued losses at GMAC Financial Services," GM said.
Meanwhile, GM announced that diminishing funds have forced it to halt acquisition talks with Chrysler. GM also warned that company cash reserves could dry up next year.
Revenue in the third quarter was at $37.9 billion. In the same period one year earlier, GM's revenue was $43.7 billion.
This year's drop translates to share-value deterioration of $4.45.
The news from GM came only hours after Ford released its own grim financial update earlier in the day.
U.S. president-elect Barack Obama addressed the auto sector's problems in his first press conference since being elected on Tuesday.
He called the auto industry the "backbone of American manufacturing" and pushed the Bush administration to help speed up the distribution of a US$25 billion loan program. It would be used to help automakers create more fuel-efficient vehicles.
Canadian reaction
At GM's Oshawa, Ont., plant, workers and managers have already begun to prepare for assembly line slowdowns and potential staff cutbacks.
However, Oshawa mayor John Gray added that he doesn't anticipate any shifts will be lost.
"Obviously it's not good news out of any of the auto manufacturers. It's about consumer confidence in the United States and I hope they can get it turned around because if they can't, it's going to hurt us even more if we don't get that consumer confidence back."
Gray suggested a government bailout shouldn't be ruled out since the industry is vital to the nation's economy.
He said the industry simply needs help to get through a difficult period.
"I look at what the automotive manufacturers are doing right now, the innovations they're doing, the products they're going to be coming out with in just a few short yeas," Gray told CTV Toronto.
"But we have to get them to that point and that really mandates that the government needs to step in and provide some loan guarantees, because with these numbers they're not going to be able to get a cent from anybody."
Still, even veteran auto workers at the Oshawa plant, which ships 85 per cent of its product to the U.S., fear they could be laid off.
"It is possible, anything's possible, everyone is living on the edge," 20-year auto worker Bob Bawdy told CTV Toronto's Austin Delaney Friday.
Other workers expressed similar worry about their future at the Oshawa plant.
"Well, everyone's on pins and needles, I mean there's been so many lay offs," said another worker who declined to give his name.
"It's not a good feeling."
Meanwhile, the U.S. slowdown has sent shockwaves through Canadian industry.
Earlier this week, about 250 workers at Magna plants throughout the Greater Toronto Area were told they would be laid off on Dec. 23.
Plants in Newmarket, Bradford and Vaughan will be affected as Magna posted its first net-quarterly loss in 17 years.
Ford losses
The Ford Motor Co. said earlier Friday it lost $129 million and spent $7.7 billion in cash in the same period. The company also said it would be forced to cut 500 white-collar jobs in its North American offices.
Ford's losses resulted in a drop of six cents per share for the quarter -- but $1.31 per share overall, which was higher than expected.
One year ago, Ford lost $380 million, or 19 cents per share.
As a result of the losses, Ford said it will shed a further 10 per cent of its North American salaried workers in a desperate attempt to survive the current global economic slowdown.
Much of Ford's troubles result from lagging sales of high-end Jaguar and Land Rover vehicles. Twenty-two per cent fewer Jags and Land Rovers rolled off of dealers' lots in the third quarter, resulting in a drop in sales from $41.1 billion to $32.1 billion.
Both Ford and GM said recently that factory production needs to reflect declining sales -- which will likely translate to further job cuts for both.
The Associated Press reports that neither company is planning to close factories, but may well slash shifts, ban overtime and schedule temporary plant shutdowns.
GM is also expected to slow down its product development schedule.
The president of the Canadian Auto Workers union told AP he hopes Ontario workers will be protected from the job cuts.
"We're watching with anxiety," Ken Lewenza said on Thursday.
"I'm hoping that they're not going to announce more layoffs because we've suffered. I'd prefer temporary layoffs, temporary shutdowns in lieu of anything permanent until this darn economy turns around."
Lewenza added that the Canadian government hasn't been proactive enough in ensuring the domestic manufacturing sector weathers the economic storm.
"Our problem here in Canada is that we don't see the urgency out of the Canadian government the same way we see urgency out of the US government."
Top executives from Ford and GM travelled to Washington on Thursday to make an argument for more federal funding to help deal with declining sales. There is no word yet on whether the request was granted.
BNN's Michael Kane said governments in Canada and the U.S. need to decide whether the auto industry is too important to allow it to fail.
"You can look at it as a sick patient. They're in intensive care and they're asking for certain medicines to get better with and it's up to government to figure out how much they can afford to prop up these outfits," Kane said.
With files from The Associated Press
