General Motors (GM) said on Tuesday it planned to offer voluntary buyouts to all 74,000 members of its union-represented US workforce as the struggling automaker posted its biggest annual loss ever.
GM reported on Tuesday that it lost a record US$38.7 billion last year, mostly as a result of a writedown in tax credits in the third quarter that were expected to expire unused.
The employee buyouts would permit GM to make a further transformation of its workforce after years of painful reorganization in the face of eroding market share, especially in North America, by making room for a new class of lower-paid workers in its US plants.
GM said that while it expects to continue to grow its revenue globally this year, conditions in its home market are "challenging" and future job cuts could occur if conditions worsen.
"If they are going to be tougher [than expected], we'll take whatever actions we need to do to get our capacity in line with demand," said Fritz Henderson, GM's chief financial officer.
The automaker expects to slash US$4.5 billion to US$5.5 billion in costs by 2010 and could see revenues increase another US$1 billion to US$1.5 billion if the North American auto market returns to its previously robust demand, he said.
"In order to get North America sustainably profitable in generating cash we need to execute all of our structural cost actions and we need to win in the market," Henderson said in a conference call.
"We've started to see some evidence of that in 2007, which is encouraging, but we need to frankly step on the gas in terms of how we're performing in the market," he said.
The White House on Tuesday expressed optimism about the auto industry over the long term, while noting that GM's loss was "significant."
US carmakers are adjusting "in structural ways that can help keep them competitive in the future and we're confident that, over time, that they're going to be successful in doing that," spokeswoman Dana Perino said.
Virtually all of the company's loss for last year was the result of a massive accounting charge.
GM in the third quarter decided to write down the nearly US$39 billion in accumulated tax credits when it realized it might not be able to earn enough money to use them before they expire.
Excluding special items, GM's loss was a more modest US$23 million, or US$0.04 per share, on revenues of US$181 billion.
In the fourth quarter, GM reported a net loss of US$722 million, or US$1.28 per share, with results affected by a variety of special charges and tax benefits.
Excluding special items, the results would translate to a profit of US$46 million, or US$0.08 a share, on revenues of US$47.1 billion.
GM chief executive officer Rick Wagoner said 2007 was a year "of important progress for GM, as we implemented further significant structural cost reductions in North America [and] grew aggressively in emerging markets."
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