DETROIT (AP) — General Motors will cut up to 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles, the automaker announced Monday.
The reductions could amount to as much as 8 percent of GM’s global workforce of 180,000 employees.
The restructuring reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the US were trucks or SUVs. That figure was about 50 percent cars just five years ago.
Members of Unifor, the union representing the workers of Oshawa`s General Motors assembly plant, stand near the entrance to the plant in Oshawa, Ontario, Monday, Nov. 26, 2018. General Motors will lay off thousands of factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles. General Motors is closing the Oshawa plant. (AP)
GM is shedding cars largely because it doesn’t make money on them, Citi analyst Itay Michaeli wrote in a note to investors.
“We estimate sedans operate at a significant loss, hence the need for classic restructuring,” he wrote.
The reduction includes about 8,000 white-collar employees, or 15 percent of GM’s North American white-collar workforce. Some will take buyouts while others will be laid off.
At the factories, around 3,300 blue-collar workers could lose jobs in the US and another 2,600 in Canada, but some US workers could transfer to truck or SUV factories that are increasing production. The cuts mark GM’s first major downsizing since shedding thousands of jobs in the Great Recession.
The company also said it will stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.
General Motors Co.’s pre-emptive strike to get leaner before the next downturn likely will be followed by Ford Motor Co., which has said it is restructuring and will lay off an unspecified number of white-collar workers. Toyota Motor Corp. also has discussed cutting costs, even though it’s building a new assembly plant in Alabama.
GM isn’t the first to abandon much of the car market. Fiat Chrysler Automobiles got out of small and midsize cars two years ago, while Ford announced plans to shed all cars but the Mustang sports car in the US in the coming years.
The layoffs come amid the backdrop of a trade wars between the US, China and Europe that likely will lead to higher prices for imported vehicles and those exported from the US GM CEO Mary Barra said the company faces challenges from tariffs but she did not directly link the layoffs to them.
GM doesn’t foresee an economic downturn and is making the cuts “to get in front of it while the company is strong and while the economy is strong,” Barra told reporters.
Factories that could be closed include assembly plants in Detroit and Oshawa, Ontario, and Lordstown, Ohio, as well as transmission plants in Warren, Michigan, and near Baltimore.
The announcement worried GM workers who could lose their jobs.
“I don’t know how I’m going to feed my family,” Matt Smith, a worker at the Ontario factory, said Monday outside the plant’s south gate, where workers blocked trucks from entering or leaving. “It’s hard. It’s horrible.” Smith’s wife also works at the plant. The couple has an 11-month-old at home.
Workers of Oshawa`s General Motors car assembly plant, listen to Jerry Dias, president of UNIFOR, the union representing the workers, at the union headquarters in Oshawa, Ont. on Monday, Nov. 26, 2018. (AP)
Workers at the Ontario plant walked off the job Monday but were expected to return Tuesday.
After the morning announcement, Barra was to head for Washington to speak with White House economic adviser Larry Kudlow in what was described as a previously scheduled meeting, according to a White House official who spoke on condition of anonymity because the official was not authorized to discuss the meeting publicly.
President Donald Trump, who has made bringing back auto jobs a big part of his appeal to Ohio and other Great Lakes states that are crucial to his re-election, said his administration and lawmakers are exerting “a lot of pressure” on GM.
Trump said he was being tough on Barra. He said he told the company that the US has done a lot for GM and that if its cars aren’t selling, the company needs to produce ones that will.
At a rally near GM’s Lordstown, Ohio, plant last summer, Trump told people not to sell their homes because the jobs are “all coming back.”
Most of the factories to be affected by GM’s restructuring build cars that will not be sold in the US after next year. They could close or they could get different vehicles to build. Their futures will be part of contract talks with the United Auto Workers union next year.
The Detroit-based union has already condemned GM’s actions and threatened to fight them “through every legal, contractual and collective bargaining avenue open to our membership.”
Bobbi Marsh, who has worked assembling the Chevrolet Cruze compact car at the Ohio plant since 2008, said she can’t understand why the factory might close given the strong economy.
“I can’t believe our president would allow this to happen,” she said Monday.
She now faces an uncertain future, not knowing whether the plant will close for good or if there’s a chance it could find another use.
“Everything is up in the air,” she said. “I don’t want to give up hope for this facility and these people. I spend more time around them than my own family. It would be like breaking up a family.”
Democratic Sen. Sherrod Brown said the move will be disastrous for the region around Youngstown, Ohio, east of Cleveland, where GM is one of the area’s few remaining industrial anchors.
“GM received record tax breaks as a result of the GOP’s tax bill last year, and has eliminated jobs instead of using that tax windfall to invest in American workers,” he said in a statement.
Many of those who will lose jobs are now working on conventional cars with internal combustion engines. Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust.
She said GM is still hiring people with expertise in software and electric and autonomous vehicles.
In this July 27, 2011, file photo, assembly worker Julaynne Trusel works on a Chevrolet Volt at the General Motors Hamtramck Assembly plant in Hamtramck, Mich. GM announced Monday, Nov. 26, 2018, that it will lay off thousands of factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles. Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars. (AP)
GM will stop producing cars and transmissions at the plants through 2019. In all, six car models were scrapped, leaving the company with nine remaining car models.
The automaker said it was ending Chevrolet Volt production because the vehicle was meant to be a bridge to fully electric cars when it was introduced about a decade ago. The Volt has a small battery that can take it about 50 miles, then it switches to a small gasoline engine.
Since it was introduced, battery technology has improved dramatically. Now the full-electric Chevrolet Bolt can go up to 238 miles on a single charge.
GM builds full-size Chevrolet and GMC pickups in Mexico, and it recently announced that a new Chevrolet Blazer SUV will be built there. Also, GM imports the Buick Envision midsize SUV from China.