GM to slash up to 14,000 jobs in North America
By TOM KRISHER, AP Auto Writer
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 the changing U.S. and North American auto markets as manufacturers continue a dramatic shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. It was about 50 percent cars just five years ago.
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 Canada and another 2,600 in the U.S., but some U.S. workers could transfer to truck or SUV factories that are increasing production.
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 its 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 U.S. in the coming years.
Shares of GM, the largest automaker in the U.S. which sells the Chevrolet, Buick, Cadillac and GMC brands, rose nearly 6 percent on the news to $37.98 in Monday afternoon trading.
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,” CEO Mary Barra told reporters.
She also noted that tariffs on imported aluminum and steel have hit the company, but she stopped short of saying they had anything to do with the restructuring.
After the morning announcement, Barra was to head for Washington to meet 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 is not authorized to discuss the meeting publicly.
Most of the factories to be affected by GM’s restructuring build cars that will not be sold in the U.S. 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.”
Factories that don’t have any products after next year and 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.
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.”
She said the announcement caught her off guard, but she still has faith that union leaders will figure out a way to keep the plant going.
President Donald Trump had no immediate comment. At a rally near the Lordstown plant last summer, Trump told people not to sell their homes because the jobs are “coming back. They’re all coming back.”
Democratic Sen. Sherrod Brown said GM announced plans to build an SUV in Mexico while laying off workers in Lordstown.
“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.
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.
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.
Among the facilities on the chopping block are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars. LaCrosse and Chevrolet Volt plug-in hybrid production will end March 1, while CT6 and Impala production would stop June 1.
Barra said the Cruze would no longer be sold in the U.S. Production would stop March 1.
Work on six-speed transmissions made at the Warren, Michigan, transmission plant would stop Aug. 1, while the Baltimore transmission plant would stop production April 1, GM said.
GM said it was ending 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.
Meanwhile, GM’s plant in Oshawa, Ontario, will stop making the Impala, Cadillac XTS and 2018 full-size pickups in the fourth quarter of next year. The Canadian plant appeared to be most in danger of closing.
In the U.S., automakers have enough factory capacity to build about 14 million vehicles per year, but last year they manufactured 11 million, according to the Center for Automotive Research.
More than one-third of that idle capacity — 1.3 million vehicles — is in five GM car plants that are operating at 37 percent capacity, the center said.
Truck and SUV plants, on the other hand, operate nearly around the clock on three shifts and are at 105 percent of capacity. That’s how GM can meet demand for trucks and SUVs while raising the possibility of closing car factories.
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.
Associated Press writers Rob Gillies in Toronto, John Seewer in Toledo, Ohio, and Zeke Miller in Washington contributed to this report.