General Motors Corp. (GM) has made significant progress on its turnaround plan in the past year, reducing costs and rolling out new products, the company's chairman and chief executive told shareholders Tuesday.

Rick Wagoner said the automaker expects to cut $7 billion in structural costs in North America, reducing its costs from 34 percent of revenue last year to 25 percent in 2010.

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The cuts will make GM a global leader in the industry and position it for sustained profitability, not just short-term profits, he said.

"These are huge reductions for GM and any other corporation anywhere," Wagoner said.

GM earned $445 million in the first quarter of this year compared with a loss of $1.3 billion in the January-March period a year ago. It was the first quarterly profit since 2004 for the world's largest automaker, which lost $10.6 billion in 2005.

But GM continues to face significant hurdles. The company is in talks with its former auto parts division, Delphi Corp., and the United Auto Workers on a deal to lower wages at Delphi, which has filed for bankruptcy protection. Delphi is seeking a judge's approval to cancel its labor contracts, a move that could provoke a strike and devastate GM, its largest customer.

GM also continues to struggle in its home market. U.S. sales fell 8 percent in the first five months of this year as high gas prices took a toll on truck sales and GM pulled back on sales to rental fleets. The company has pledged to stick to its strategy of lower prices instead of relying so heavily on incentives, but some analysts question whether that can continue.

GM is facing several federal investigations into accounting practices and recently was forced to restate five years of earnings. Wagoner has called the accounting errors "extremely disappointing and embarrassing," and the company has hired an outside accounting adviser.

Also, GM and its unions will begin negotiating a new contract with the UAW next year. The talks could be contentious as the automaker tries to get its labor, health care and pension costs under control.

GM shares fell 31 cents, or 1.2 percent, to $25.74 in morning trading on the New York Stock Exchange. They have traded in a 52-week range of $18.33 to $37.70.

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