General Motors to cut 15 percent of workforce to save $6B

  • 26 Nov 2018

The US auto giant will lay off up to 14,000 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 job cuts from the current 180,000 GM workforce will included a 25 percent reduction in executive-level employees to "streamline decision making." ( AP Archive )

In a massive restructuring, US auto giant General Motors announced on Monday it would cut 15 percent of its workforce to save $6 billion and adapt to "changing market conditions."

The moves include shuttering seven plants worldwide as the company responds to changing customer preferences and focuses on popular trucks and SUVs and increasingly on electric models.

General Motors will lay off up to 14,000 factory and white-collar workers in North America and put five plants up for possible closure.

The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Some US factory workers could transfer to truck or SUV factories that are increasing production.

The salaried reductions amount to 15 percent of GM's North American white-collar workforce of 54,000. At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the US.

"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," GMCEO Mary Barra said in a statement.

GM will shutter three North American auto assembly plants next year: the Oshawa plan in Ontario, Canada; Hamtramck in Detroit, Michigan and Lordstown in Warren, Ohio.

In addition, it will close propulsion plants ––  which produce batteries and transmissions –– in Baltimore, Maryland and Warren, Michigan, as well two more unidentified plants outside of North America. GM already had announced plans to cease operations at its Gunsan, Korea plant.

"We recognise the need to stay in front of changing market conditions and customer preferences to position our company for long-term success," Barra said.

Trump says he does not like GM plan 

US President Donald Trump said on Monday he did not like General Motors Co's announcement it would cut its North American workforce and slash production on slow-selling models.

Trump told reporters he was not happy with GM's decision to idle a plant in Lordstown, Ohio and that GM had "better put something else" in Ohio.

He said he told GM Chief Executive Mary Barra he was unhappy with the announcement. She told him the decision to halt sales of the Chevrolet Cruze had "nothing to do with tariffs" but was because of poor sales."

'Deep disappointment'

The job cuts from the current 180,000 GM workforce will included a 25 percent reduction in executive-level employees to "streamline decision making." The Canadian plant employs about 3,000 workers. 

Trading in GM shares was halted just before the announcement. Once it restarted 20 minutes later, prices jumped and continued rising, showing a gain of more than six percent to $38.25 around 1600 GMT.

As GM has been increasing its focus on highly popular trucks and SUVs it "now intends to prioritise future vehicle investments in its next-generation battery-electric architectures."

"As the current vehicle portfolio is optimised, it is expected that more than 75 percent of GM's global sales volume will come from five vehicle architectures by early next decade," the company said in a statement.

In an investor call, Barra said some GM cars would no longer be available in North America.

"We're evaluating the Chevrolet Cruze for other markets, but none would be shipped to the US," she said.

The restructuring follows a similar move by Ford to cut down on the number of models it manufactures.

Trudeau's reaction

Canadian Prime Minister Justin Trudeau said he had spoken to Barra on Sunday to express his "deep disappointment in the closure."

"GM workers have been part of the heart and soul of Oshawa for generations –– and we'll do everything we can to help the families affected by this news get back on their feet," Trudeau said on Twitter.

Barra in the statement said the actions "will increase the long-term profit and cash generation potential of the company and improve resilience."

Unifor(union) members block gate 1 of the General Motors Oshawa plant in Oshawa, Ontario, on November 26, 2018.(AFP)

Workers protest

Workers in the Unifor trade union walked out of the Oshawa plant "in protest," ahead of a meeting with GM about the announcement, a union spokeswoman said.

"I've moved my family twice for this company and they do this to me," a tearful worker told CBC TV as he left the plant.

Under Unifor's four-year contract signed in 2016, GM must give the union a year's notice before closing the plant. The automaker intends to close the plant in December, 2019.

A 2015 study commissioned by Unifor, which represents GM employees, estimated that shutting the plant would eliminate 4,100 direct jobs and reduce Ontario's gross domestic product by $0.8B.