GM stopping work at 5 plants, laying off salaried workers

GM stopping work at 5 plants, laying off salaried workers

GM to slash 14,700 jobs in North America; Lordstown plant will close

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 cut costs and focus more on autonomous and electric vehicles.

The reduction includes about 8,000 white-collar employees, or 15 percent of GMs North American white-collar workforce. Some will take buyouts while others will be laid off.

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GM to cut 14,700 jobs, shutter 5 North American plants

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, Korea.

“I have spoken to UAW President Gary Jones and the citys economic development team. They are working together to come up with a solution that works for GM and the employees. We all know there is strong demand for manufacturing space in Detroit and we are willing to work with GM to fill all the available manufacturing space at Poletown with either GM-related entities or other companies.”

The restructuring reflects the changing U.S. and North American auto markets as a dramatic shift away from cars toward SUVs and trucks continues. 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.

The automaker cites “transforming product development,” “optimizing product portfolio,” “staffing transformation”  and “increasing capacity utilization” as the three core reasons behind the cuts. In addition to the three assembly plants closing, GM will also unallocate the propulsion plants in Warren, Michigan and White Marsh, Maryland in the same timeframe. 

GM is shedding cars largely because it doesnt make money on them, Citi analyst Itay Michaeli wrote in a note to investors.

“If we want our auto industry to continue to be the global leader in transforming mobility, federal policy must ensure we keep them at the forefront of innovation and technology. Congress must work together on bipartisan policies that keep manufacturing jobs in this country, develops clean energy, and supports infrastructure to transform our mobility future.”

We estimate sedans operate at a significant loss, hence the need for classic restructuring, he wrote.

The Detroit-based automaker confirmed the measures in a Monday morning, Nov. 26 news release in saying these moves “will accelerate its transformation for the future.” That future is an all-electric one, and GM says in the release that these “proactive steps” will help improve overall business performance and internal organization. 

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 its building a new assembly plant in Alabama.

GM isnt 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.

GM reports that closing the Detroit-Hamtramck Assembly Plant, Lordstown Assembly Plant in Warren, Ohio and Oshawa Assembly plant in Ontario will increase its cash flow by $6 billion by the end of 2020. The Associated Press reports the move will see 14,700 employees laid off, including 8,100 salaried, white-collar workers. 

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 $37.93 in midday trading Monday.

Video: GM announces layoffs, plans to halt production at five plants in U.S., Canada

GM said the moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.

“This is a warning and we all must be concerned about protecting jobs and keeping them in this country. I care deeply about working families hearing this news right now,” U.S. Rep. Debbie Dingell, D-Dearborn, said in her own emailed statement. 

GM doesnt 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.

A.P. reports that the reductions in salaried employees represents a 15 percent reduction to GMs North American workforce. The automaker says that some of the U.S. employees will have the option to transfer to plants that will see an increase in volume. 

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.

If all the factory workers are laid off, the reductions announced Monday would be about would be about 8 percent of GMs global workforce of 180,000 employees.

Mary Barra, the automakers CEO and chairman, said that these measures will continue GMs transformation into a “highly agile, resilient and profitable” company with some needed investment flexibility. 

The reductions could ripple through auto parts suppliers such as Aptiv and Magna International, Michaeli said.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” Barra said in a release. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

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.

The transition also includes ceasing production of six vehicles; the Chevrolet Cruze, Volt and Impala, the Buick LaCrosse, Cadillac XTS sedan and Cadillac CT6 sedan. According to the company, the Detroit-Hamtramck Assembly Plant produces the Volt, Impala, LaCrosse and CT6.

She said GM is still hiring people with expertise in software and electric and autonomous vehicles. The company has invested in newer architectures for trucks and SUVs so it can cut capital spending while still raising investment in autonomous and electric vehicles.

Barra also was meeting with White House Economic Adviser Larry Kudlow on Monday, a White House official confirms. The meeting has apparently been on the books for weeks and it's just a coincidence that the meeting and the announcement happened on the same day.

GM has offered buyouts to 18,000 retirement-eligible workers with a dozen or more years of service. It would not say how many have accepted the buyouts, but it was short of the companys target because GM said there will be white-collar layoffs.

According to a spokesperson for GM, the plants will be unallocated which means they will no longer produce vehicles in those plants in 2019. According to the company, the future of the plants will be part of contract talks with the UAW next year.

The company expects to take a pretax charge of $3 billion to $3.8 billion due to the actions, including up to $1.8 billion of asset write downs and pension charges. The charges will take place in the fourth quarter of 2018 and the first quarter of next year.

President Donald Trump said he is not happy with General Motors decision to close several plants in Michigan and Ohio. The president said he spoke with CEO Mary Barra, telling her he wasnt happy with the decision the company made.

Most of the factories to be affected by GMs restructuring build cars that wont 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 company said that the moves will help continue its focus on crossovers, SUVs and trucks. With the move, GM plans to cut 25 percent of the executive staff and 15 percent of the salaried and salaried contract staff.

The Detroit-based union has already condemned GMs actions and threatened to fight them through every legal, contractual and collective bargaining avenue open to our membership.

Among the possibilities 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 Volt production will end March 1, while CT6 and Impala production would stop June 1.

On Monday, GM announced it would close several plants, including two in metro Detroit; the Detroit-Hamtramck Assembly Plant and the Warren Transmission Operations plant.

The plant in Lordstown, Ohio, which makes the Chevrolet Cruze compact car also is on the list, and Barra said the Cruze would no longer be sold in the U.S. Production would stop March 1.

According to the release, GM will lay off 14,700 factory and white-collar workers. Of those, 8,100 will be white-collar workers that will either take buyouts or be laid off.

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.

"Hopefully she’s going to come back and put something, but I told her I’m not happy about it," he added.

Meanwhile, GMs 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.

Ontario Premier Doug Ford said he talked to the head of GM on Sunday and was told the ship has already left the dock when he asked if there was anything Ontario could do.

Canadian Prime Minister Justin Trudeau said he spoke to Barra on Sunday to express his deep disappointment with the closure.

DETROIT (AP) — General Motors will lay off 14,700 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.

The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Most of the affected factories build cars that wont be sold in the U.S. after next year. They could close or they could get different vehicles to build. They will be part of contract talks with the United Auto Workers union next year.

>>Read more: Sherrod Brown calls GM Lordstown closing ‘corporate greed at its worst’

 The salaried reductions amount to 15 percent of GMs North American workforce out of 54,000. At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the U.S. Some U.S. workers would transfer to truck and SUV plants where GM is increasing output, the company said.

GM, the largest automaker in the U.S. and includes the Chevrolet, Buick, Cadillac and GMC brands, said the moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.

GM doesnt 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.

Barra said GM is still hiring people with expertise in software and electric and autonomous vehicles, and many of those who will lose their 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 with it. 

The company, she said, has invested in newer architectures for trucks and SUVs so it can cut capital spending while still raising investment in autonomous and electric vehicles.

GM has offered buyouts to 18,000 retirement-eligible workers with a dozen or more years of service. It would not say how many have accepted the buyouts, but it was short of the companys target because GM said there will be white-collar layoffs. 

The company expects to take a pretax charge of $3 billion to $3.8 billion due to the actions, including up to $1.8 billion of asset write downs and pension charges. The charges will take place in the fourth quarter of 2018 and the first quarter of next year.

The factories up for closure are part of GMs effort “to right-size our capacity for the realities of the marketplace,” as consumers shift away from cars to trucks and SUVs, Barra said.

Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, Chevrolet Volt, Cadillac CT6 and Chevrolet Impala, all slow-selling cars. LaCrosse and Volt production will end March 1, while CT6 and Impala production would stop June 1.

The plant in Lordstown, Ohio, which makes the Chevrolet Cruze compact car also is on the list, and 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.

Meanwhile, GMs plant in Oshawa, Ontario, will stop making the Impala, Cadillac XTS and 2018 full-size pickups in the fourth quarter of next year.

Barra said tariffs on imported aluminum and steel have hit the company, but she stopped short of saying they had anything to do with the restructuring.


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