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US Communities Ponder Economic Future After GM Lays Off Thousands

U.S. communities that depended on General Motors for jobs are reacting with dismay to the news that the auto company is closing a dozen factories and laying off 30,000 workers. The auto company announced the layoffs on Monday, but the economic impact will be felt for years.

General Motors Chairman Rick Wagoner says slashing billions of dollars in costs is necessary to save the company, and bring it back to profitability.

But he admits it will be difficult for suppliers, employees, and the towns where they work.

"This is tough medicine for us and I thing it's tough medicine for everyone involved with the company," he said.

The layoffs cut about 17 percent of GM's 173,000-person workforce.

United Auto Workers Union official Bob Alexander called the job cuts devastating.

"It's hard because there are no jobs in the area, let alone the country," he said. "We've sat back and watched all these jobs leave the country."

The union says it is not possible for GM to shrink its way back to profitability, and calls it unfair for workers to pay the price for management blunders. Labor organizers called on the company to revamp its products to make them more appealing to customers.

GM has lost billions of dollars already this year as gasoline prices soared and demand sagged for its fuel-thirsty SUV's and other large vehicles.

Auto industry expert Keith Crain, publisher of Automotive News, says even with the thousands of layoffs, the auto giant has yet to address all its problems.

"What General Motors is doing is necessary, but by no means is what General Motors is doing today a guarantee of their profitability and their prosperity," he said.

Analysts says GM's highly paid work force is well-protected by health benefits and pensions, and these costs make GM cars more expensive than those from foreign competitors.

GM once dominated the U.S. auto market, but its percentage of car sales has fallen as Toyota and other Asian-based auto-makers have gained market share.