G.M. Suspends Dividend and Plans More Layoffs

By NICK BUNKLEY and BILL VLASIC

DETROIT — General Motors revealed a plan on Tuesday to address its deteriorating sales and liquidity by suspending its dividend, laying off salaried workers and cutting its truck production. In addition, the company said that it would borrow $2 billion to $3 billion to withstand the decline in the auto market.

As part of the plan, the company also said that it would sell up to $4 billion of assets.

The moves will raise $15 billion, the company said. G.M.’s chief executive, Rick Wagoner, announced the plan Tuesday morning to employees.

“Today’s actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company,” Mr. Wagoner said in a statement.

G.M. said that it hoped to cut employment costs of salaried workers by 20 percent or $1.5 billion in 2009. The cuts, it said would be done through attrition, retirements, and if, need be layoffs.

In addition, health care coverage for salaried retirees over 65 will be eliminated in January, with affected retirees and surviving spouses receiving pension increases to help offset costs of Medicare and supplemental coverage.

Company shares rose 2.8 percent to $9.65 in premarket trading.

Industry analysts said that G.M. needed the broad cuts to persuade Wall Street that it was reacting sufficiently to drastic changes in the United States market.

G.M. has about 32,000 white-collar jobs in the United States, down from 45,000 in 2000. The company has already eliminated more than 40,000 hourly jobs through buyouts and early retirements since 2006.

At G.M.’s annual stockholders’ meeting last month in Delaware, Mr. Wagoner announced plans to close four plants in North America that build slow-selling trucks, but salaried workers were for the most part unaffected.

Since then, G.M. has halted work on some trucks and other vehicles, leaving employees assigned to those projects in jeopardy. Analysts said the automaker might announce further plans to consolidate some vehicle programs.

Ford Motor, meanwhile, recently began laying off workers to eliminate 15 percent of its salaried labor costs by Aug. 1. Ford is also idling plants and delaying the introduction of its redesigned F-150 pickup in response to record gasoline prices that have decimated sales of big, gas-thirsty vehicles.

Shares of G.M. declined 5.4 percent Monday to $9.38, their lowest closing price in more than half a century. The stock was worth more than $40 as recently as October.

In the first half of 2008, G.M.’s sales were down 16.1 percent. Total industry sales were off 10.1 percent, with truck sales declining by 17.9 percent.

Ford and G.M. have extended the annual two-week summer shutdown at many of their truck plants to as long as three months because inventories of those vehicles were so large. Last week, Toyota of Japan said it would halt truck production in Texas and Indiana for three months starting Aug. 8.

Three months ago, G.M. said it had $24 billion in cash and access to a $7 billion credit line. But analysts estimate that the company has been burning through about $3 billion in cash a quarter, and they say G.M. needs to act quickly to avoid a liquidity crisis.

The automaker, analysts say, needs at least $10 billion to $15 billion in new capital to assure its liquidity through next year.

Last week, Mr. Wagoner said that G.M. had enough cash and borrowing power to last through 2008.