The announcement in November that General Motors Corp. would be eliminating 30,000 jobs and closing 12 of its facilities by 2008 erased many doubts about the extent of the current automobile industry downturn.

Tuesday's announcement that GM is cutting in half its yearly dividend to $1 a share, reducing the salaries of its chairman and senior leadership team, cutting health benefits for salaried retirees, and evaluating ways to restructure its pension plan for salaried U.S. workers provides a new, deeper, more-telling perspective of the serious troubles facing America's biggest automaker.

When companies make cuts, it is bottom- and middle-rung workers who usually are made to absorb the hit, and in most cases that action is deemed sufficient to weather the difficult times. But when top-rung executives also must accept huge cuts, as will occur this time, it indicates that a problem is much more serious than had been previously diagnosed and acknowledged and that, perhaps, further restructuring and major job cuts could be in the offing companywide.

It is laudable that General Motors' top executives opted for deep cuts directly affecting them to help send the message that the full breadth and depth of the corporation must accept the consequences of low vehicle sales, foreign competition and the challenging costs of doing business. However, it also is fair to observe that, while cuts that affect rank-and-file workers will be longstanding, if not felt permanently, the cuts currently being implemented for top executives will most likely be reversed quickly when the auto industry's fortunes rebound.

Nevertheless, the number that has emerged from the nation's — and world's — largest automaker — that it lost $8.6 billion in 2005 — is staggering.

And, that number, coupled with the fact that GM is suffering from declining U.S. market share and rising health care and pension costs, shows why shareholder pressure is crunching the ways of the past at the giant corporation, including top executives' compensation packages.

"These are difficult decisions that involve sacrifices by our employees, stockholders, retirees and the senior leadership team," said Rick Wagoner, GM chairman and chief executive officer. "However, we are confronting a dramatic change in our industry and in the global competitive environment, and that requires us to look for additional ways to reduce financial risk and improve our competitiveness for the long term."

Part of the improved-competitiveness goal must revolve around much-more-fuel-efficient vehicles, coupled with a new, affordable vehicle design that evokes a stampede of popularity in much the way Ford Motor Co.'s Mustang did in the mid-1960s, followed quickly by GM's introduction of the Chevrolet Camaro.

Because such steps are not already in progress is indicative of why GM is in such doldrums and must resort to gimmicks such as "employee pricing" and deep rebates to try to sell vehicles that car buyers are not enthusiastic about owning, even with the incentives, when stacked up against the products of foreign automakers.