Salaried GM workers prepare for cuts

General Motors Corp. is expected to start cutting thousands of salaried workers on Tuesday as part of a sweeping restructuring aimed at stemming losses and market share, a source close to the situation said on Monday.

Tuesday’s cuts will be in the engineering division, the source said. He also said reductions in sales and marketing staff would be announced in April.

The job cuts will be the first of those announced last November, when the struggling automaker said it would let go of 7 percent of its 36,000 white-collar U.S. employees this year.

A GM spokesman declined comment, saying the company had ”nothing to announce or confirm.”

The world’s largest automaker lost $10.6 billion in 2005 as it faced high labor and commodities costs, loss of U.S. market share to foreign rivals and sluggish sales of sport-utility vehicles -- typically its largest profit generators.

The staff reduction “sends a message to the union that everyone is sharing the pain,” Argus Research analyst Kevin Tynan said.

In November, GM reached a deal with the United Auto Workers union (UAW) that would slash its health care costs by $1 billion a year. The automaker in January halved its dividend, cutting it for the first time in more than 13 years and said it would reduce top executive pay by 30 percent.

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GM last week reached a deal with the UAW to offer more than 100,000 early retirement packages to hourly workers as part of a plan to lop off 30,000 jobs and close 12 plants through 2008.

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The atmosphere at GM’s Warren Technical Center in Michigan was tense on Monday, as engineers remained uncertain about their future, the source said. Employees have been told to cancel vacations scheduled on Tuesday, he added.

“Fundamentally speaking, GM has enough capacity to service one-third of the American vehicle business, but they only have about a quarter of it right now,” Burnham Securities analyst David Healy said.

“One of the necessities of the restructuring program is to downsize,” Healy said. “GM has too many plants, too many people, and too many models.”