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Financial analysts hailed the move, and even union officials were at least somewhat understanding. Nonetheless, the announcement from General Motors last week sent a powerful shudder of concern through the Midwestern Rustbelt. GM Chairman Roger Smith said that starting next year the giant automaker will begin the largest pruning operation in its 78-year history. As the first stage in that cutback, GM will shut down ten of its plants and partly close another, in Michigan, Illinois, Missouri and Ohio, dismissing no fewer than 29,000 workers over a three-year period. GM billed the action as part of a $10 billion "construction and modernization program" designed to create a "trimmer and more competitive company." Other shutdowns, warned GM President James McDonald, are "under study."

For any corporation but GM, perhaps, the cutbacks would have to be described as draconian. But the world's largest automaker has a total of 223 plants, which assembled some 9.3 million cars, trucks and buses last year. The facilities marked for closure produced roughly 600,000 cars and trucks for 1986, and include the company's oldest factory still in operation, a 67-year- old Cadillac Fleetwood plant in Detroit. As Smith pointed out, six new GM plants, in Michigan, Missouri, Kansas, Indiana and Louisiana (four open, one due to begin production next month and one scheduled for 1987), have replaced much of the aged capacity.

The dismissals represent a permanent net loss of almost 5.7% of GM's approximately 512,000 hourly and salaried U.S. employees. Even so, United Auto Workers officials sounded resigned as they explained that numerous GM workers with high seniority had earlier been transferred to newer facilities. Some of the remaining released workers will be covered by unemployment benefits that can equal up to 95% of after-tax pay for as long as two years. Michigan Governor James Blanchard, whose state will be socked with seven of the closings, affecting 17,450 workers, decried the cutbacks but acknowledged that they were a "way for GM to accommodate recent expansions."

For GM, the immediate benefit of wielding the ax will be savings estimated at $500 million annually. A more nebulous gain, Chairman Smith hopes, will be the recovery of investor confidence in a company that suffered third-quarter operating losses of $338.5 million. Said Smith last week: "We have progressed to the point where expected efficiencies can begin to pay off. It's been a long, steady course, and we're starting to see the sun coming over the horizon."