General Motors plans to cut at least 25,000 jobs in the U.S. by 2008, the automaker's CEO said Tuesday at the company's annual meeting.

Speaking in Wilmington, Del., Rick Wagoner said the cuts will generate annual savings of approximately $2.5 billion US.

GM employs about 324,000 people around the world, with about half of them in the United States, according to the company's web site.

Richard Wagoner, chairman and CEO of General Motors, speaks at the GM annual meeting in Wilmington, Del. (AP photo)
Richard Wagoner, chairman and CEO of General Motors, speaks at the GM annual meeting in Wilmington, Del. (AP photo)

Wagoner did not mention any reductions in GM's staffing in Canada, where the company employs about 22,000 people.

GM has been cutting plants and production in recent years, reducing its annual assembly capacity from six million units in 2002 to five million units by the end of this year, he said.

Wagoner added that GM expects to close more assembly and component plants over the next few years to eliminate excess production capacity.

Shares of GM rose in the wake of the announcement, climbing 31 cents to $30.73 US on the NYSE.

Canadian fallout likely: analyst

Auto analyst Dennis DesRosiers said there will likely be fallout in Canada from the GM announcement. He said the closure of U.S. assembly plants could lead to cutbacks in Canada.

DesRosiers also said it would be politically difficult to impose severe cut backs in its U.S. operations while leaving its Canadian operations untouched – comments that were echoed by a Canadian Auto Workers spokesperson.

In March, GM issued a stunning profit warning, saying its 2005 profit will be less than half what it had forecast. GM said it would lose $1.50 per share in the first quarter. Its previous guidance had called for a break-even quarter.

For fiscal 2005, the automaker said it would make $1 to $2 per share profit. Previously, it had forecast income of $4 to $5 per share.

The world's largest automaker blamed tougher pricing competition and slumping sales in North America for much of its difficulties.

In early May, credit rating agency Standard & Poor's downgraded the debt of GM and Ford Motor Co. to junk status, raising questions about the future of the companies. Ratings for GM and Ford were cut as S&P warned that they were losing market share to Asian imports.