General Motors (GM) has announced it is laying off over a quarter of its North American workforce as it dramatically reduces production.

The world's largest car maker has taken the drastic action as it continues to struggle amid falling sales and increasing competition at home and abroad.

Falling sales of sports utility vehicles (SUVs) have caused a serious problem for GM, which had made the market core to its business, but as demand has dropped the company has been unable to make up the shortfall elsewhere.

That has left GM forced to cut costs and reduce its planned production output in a bid to prevent itself from overstretching in the tight market.

It is understood that as many as 12 facilities will suffer from the plans, announced at a press conference by chief executive Rick Wagoner, resulting in a significant reduction in the number of gasoline and diesel engines produced by 2008.

Mr Wagoner believes that the reductions will be necessary to bring production in line with demand by 2008.

GM's decision to cut 30,000 North American jobs and reduce its car production follows the recent announcement from Ford to reduce its white collar workforce by as much as 6,000 as the car industry continues to suffer a slump in demand.


Ÿ Adfero Ltd