Cuts signal deepening woes at GM

General Motors Corp.'s move to force out white-collar employees for the first time in about 20 years and cut benefits underscores the deepening problems facing the automaker. The escalating challenges are driving a possible acquisition of rival Chrysler LLC, analysts said.

GM's cost-cutting moves coincided with fresh signs of the devastating impact of the global financial crisis and the worst auto sales market in 15 years on Detroit's Big Three automakers.

On Thursday, Chrysler said it plans to cut 1,825 more factory jobs and accelerate the closure of a sport utility vehicle plant in Delaware. News of the cuts came as Daimler AG said it had reduced the book value of its almost 20 percent holding in the Auburn Hills company to zero — a stark sign of the U.S. automaker's deteriorating fortunes.

GM is in negotiations to acquire Chrysler from owner Cerberus Capital Management LP, but it may have trouble raising money to finance a deal. The Detroit automaker's worsening financial problems suggest it is in desperate need of aid, analysts say. That helps explain the insistence by Michigan's congressional delegation that the Big Three be included in a $700 billion Wall Street rescue package and why GM is seeking cash from outside investors and, possibly, government aid.

GM did not disclose how many more salaried workers it plans to cut, but a GM official said the number depends on a range of factors, including whether GM acquires Chrysler.

"All the troubles going through the economy are hitting the auto industry at warp speed," said Harley Shaiken, a labor professor at the University of California-Berkeley.