Troubled GM Will Eliminate 74,000 Jobs, Shut 21 Factories : Economy: The auto maker, which has suffered huge losses, does not identify which plants will close. Its action fits with recent retrenchment by blue-chip firms.

General Motors Corp., retreating further from a marketplace it has dominated since the 1920s, announced a massive retrenchment Wednesday that will close 21 factories for good and eliminate about 74,000 jobs by 1995.

But in ordering one of the biggest corporate cutbacks ever, GM left tens of thousands of workers in the dark, insisting that it has not decided which plants or jobs will get the ax. The open-ended announcement pits factories and communities against each other to persuade the auto giant to spare them.

GM’s action reflected its own deep-seated problems and those of the domestic auto industry. But it also fits the pattern of recent retrenchment by blue-chip companies across the spectrum of American industry and dramatically focuses attention on the condition of the U.S. economy.

GM said last week that it planned a big restructuring in the face of projected North American losses estimated by analysts to be at least $6 billion. But the scope of the retrenchment announced Wednesday was broader and deeper than expected. GM said it will close six assembly plants, four engine plants and 11 component plants.

“It’s clear that urgent action is required now,” Chairman Robert C. Stempel said.

Although GM remains the world’s largest auto maker, Wednesday’s action marked its third major retreat in five years and will leave the company’s U.S. and Canadian auto operations with about half as many employees--an estimated 320,000--as there were in 1985.

The repeated cutbacks were forced by GM’s loss of 12% of the U.S. auto market in the 1980s, chiefly to the Japanese; a deeper and longer recession than expected and a financial hemorrhaging of $500 million a month for the past year in its core North American car and truck business.

Ford Motor Co. and Chrysler Corp. have also suffered heavy losses but have gone further than GM in closing plants and eliminating jobs. Both say their major retrenchments are behind them.

Stempel admitted that GM’s problems go deeper than the nation’s economic woes: “We cannot blame our problems totally on the war, the plunge in consumer confidence or the recession. Rather, we must make fundamental changes in the way General Motors does business if we are to improve our performance.”

Stempel has been criticized for failing to act sooner, and these latest cutbacks are a direct response to Wall Street’s threatened lowering of GM’s credit rating, which determines the interest rate it must pay to borrow money.

But the vagueness of Wednesday’s announcement dissatisfied some analysts. Among other things, the company said it has not calculated how large a loss it will endure to close the plants and eliminate workers.

The company, which has lost a net $2.2 billion worldwide so far this year and is expected to lose $400 million more in the current quarter, has only indicated that it will take a one-time charge against earnings. The charge, whose timing was uncertain, was expected to be less than $3.3 billion.

On the New York Stock Exchange, investors had little immediate reaction. The price of GM stock fell 12 cents to $27.75 a share, near a four-year low.

The GM announcement also caused frustration in the numerous communities where plants are considered vulnerable, but now face weeks or months of uncertainty.

“I guess everybody’s on edge. We’re kind of disappointed that the corporation operates that way,” said Mike Hermes, vice president of United Auto Workers Local 1999, which represents 5,000 worker at the Oklahoma City assembly plant.

Stempel denied that GM was deliberately setting up a competition among factories to see which work force is most willing to accept concessions that would cut costs and make their plants more competitive.

“We are not in the process of whipsawing,” and GM is simply trying to be careful in making such important decisions, Stempel said. He indicated that he would rather have waited until January to make a more detailed announcement but was pressured by a steep decline in the price of GM’s stock.

Whatever GM’s intention, the effect was immediately apparent in such cities as Arlington, Tex., and Willow Run, Mich., whose plants build the same large rear-drive cars. In one of the few specifics divulged Wednesday, Stempel said one of the two plants will be closed.

“We still feel like we’ve got as good a chance to stay open as Willow Run,” said Lonnie Morgan, financial secretary of UAW Local 276 in Arlington. “Now, it’s whoever can do the best job at the lowest cost.”

Others speculated that GM also would lean on state and local governments for tax breaks and other incentives in return for keeping plants open. If so, they will find receptive audiences across the country.

“You cringe at the loss of an employer like GM, and we intend to do everything we can to see that it doesn’t happen,” said Joe Ewen, an Arlington city councilman and head of the Chamber of Commerce.

Stempel said the latest cutbacks will reduce its ability to build by about 1.4 million cars and trucks a year. Estimates of GM’s current capacity range from 6.2 million to 6.9 million, but the company will sell fewer than 5 million this year. He said GM will be producing at 100% of its capacity in 1993, slightly later than he had hoped.

Stempel also said he will continue to press the UAW for relief from its 1990 labor agreement, which has boosted the company’s labor costs by 13% in the last year. But UAW leaders immediately rebuffed the overture, as they have before.

“The fact that I’m still asking to reopen the contract indicates how far I’ve gotten,” he said.

Highlights of GM’s announcement:

--The 21 plants will close “over the next few years,” starting in 1992. Four additional assembly plants, including one in Van Nuys, Calif., have already been marked for closing, bringing the total to 25. Just two were specified Wednesday: a pair of V-6 engine plants in Lansing, Mich. GM will be left with about 125 manufacturing and assembly plants in the United States and Canada.

--GM will slash capital spending on new product programs by $1.1 billion in the next two years. Combined with previously announced reductions, the spending cutbacks come to about $2 billion, or 15%. In the process, GM will “reconfigure” its future plans for new cars and trucks and cut some projects. But all “major” vehicle programs will survive, including GM’s electric car project.

--Previously announced reductions in the salaried work force will be accelerated and deepened, with a loss of 20,000 jobs by the mid-1990s from the current 91,000. The hourly work force will shrink to 250,000 by 1995, a decline of 54,000 from the current total of active and laid-off workers in the United States and Canada. GM said it hopes to avoid layoffs, offering early retirement as early as age 53.

Under the existing labor agreement with the UAW, hourly workers are guaranteed at least 85% of full pay for three years in the event of layoffs.

Stempel said the plant closings would center on those building the Buick Roadmaster, Chevy Caprice, Cadillac Brougham and Oldsmobile Custom Cruiser wagon and on models known as the A-body and W-body cars, which include the Buick Century, Oldsmobile Cutlass Ciera, Pontiac 6000, Chevrolet Lumina, Buick Regal, Olds Cutlass Supreme and Pontiac Grand Prix.

Manufacturing experts said that suggests that the six assembly plant closings would come from among plants in Oshawa, Ontario; Oklahoma City; Fairfax, Kan.; Doraville, Ga.; Tarrytown, N.Y.; Moraine, Ohio; Wentzville, Mo., and Lake Orion, Mich., in addition to Arlington and Willow Run.

Despite an air of inevitability that surrounded GM’s action, it triggered expressions of resentment against the power of Wall Street and had strong political overtones.

Owen Bieber, the UAW president, used the occasion to criticize GM for dancing to Wall Street’s “greedy” tune, referring to the threat by Standard & Poor’s Corp. that it would further cut GM’s credit rating unless it closed plants.

“Basically, you’ve got 28-year-old MBAs on Wall Street determining the size of our major manufacturing corporations,” said Daniel Luria, economist at the Industrial Technology Institute, a nonprofit manufacturing research firm in Ann Arbor, Mich.

Stempel joined Bieber in criticizing the White House for its handling of the economy, voicing frustration that it took so long for Bush to realize the severity of the recession.

“We’ve told the Administration since March that the market was weakening, but I was told ‘no,’ ” Stempel said. “It slid more in the summer, but I was told I was being too pessimistic. We can’t wait any longer,” Stempel told a crowded news conference at GM headquarters.

Stempel and his counterparts at Ford Motor Co. and Chrysler Corp. are to travel to Japan with Bush in early January on a trade mission, a gesture widely viewed as a White House effort to show concern about the economy and talk tough to the Japanese.

The possible political damage to Japanese interests by GM’s action was not lost on Robert McCurry, the top U.S. official at Toyota, which is aggressively expanding its production facilities in this country. McCurry issued a statement from Toyota’s headquarters in Torrance, Ca., saying, “We empathize with them.”

Times staff writer Nancy Rivera Brooks contributed to this story.

Restructuring General Motors

Highlights of the GM announcement:

WORKERS:

* Next year, the white-collar force will be cut 9,000 from the current 91,000. In the next two years, it will shrink by another 11,000. That will leave 71,000 North American white-collar workers by 1995.

* In the blue-collar force, some 15,000 jobs will be cut next year and 39,000 more will go by 1995. That will leave 250,000 workers from the current 304,000.

PLANTS:

* Twenty-one manufacturing operations will be “idled”-the GM term for closing a plant it might reopen. Few such plants have ever been reactivated.

* Six vehicle manufacturing facilities, four power-train and 11 components plants will be shut. GM said it would not identify the plants involved in the cuts “at this time.”

SPENDING:

* Planned capital spending has been cut by $1.1 billion in 1992, bringing the total to $6.6 billion. Engineering budgets will be curtailed.

* The traditional $600 holiday bonus will not be paid in 1992 for the second straight year. Company contributions to employee stock ownership plans will be reduced to 25% from 50%.

Driven Out of Work

General Motors Corp. has been losing employees as well as money. On Wednesday, Chairman Robert C. Stempel, left, announced more job cuts, capping more than a decade of employment cuts. A look at GM’s year-end U.S. auto-related employment: ‘79: 618,000 ‘90: 390,000 ‘95: 320,000* * 1995 is General Motor’s projected auto-related employment in the United States and Canada. The company did not break down the number any further.

SOURCES: General Motors Corp., Reuters.