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General Motors to slash 14,700 jobs in North America, close plants

November 26, 2018

General Motors said it will cut 14,700 factory and white-collar workers in North America and put five plants up for possible closure as it restructures to reduce 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 won't be sold in the United States 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.

Plants without products include assembly plants in Detroit; Lordstown, Ohio; and Oshawa, Ontario. Also affected are transmission factories in Warren, Michigan, as well as Baltimore.

More than 6,000 factory workers could lose jobs in the U.S. and Canada, although some could transfer to truck and SUV plants.

GM is the largest automaker in the United States, and its brands include Chevrolet, Buick, Cadillac and GMC. It 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.

Those cuts are in addition to $6.5 billion that the company has announced by the end of this year.

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.

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 factories up for possible closure are part of GM's effort "to right-size our capacity for the realities of the marketplace," as consumers shift away from cars to trucks and SUVs.

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.

The salaried reductions amount to 15 percent of GM's 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 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 company's 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 cuts come on the heels of surprisingly strong third-quarter earnings. Barra is trying to make the company leaner as U.S. auto sales slide from their 2016 record year and sales in ChinaGM’s other profit centerare also in a slump. Barra is also shifting resources toward building electric cars and, eventually, vehicles that drive themselves.

“We’re taking these actions while the economy is strong,” Barra told reporters in Detroit. “This industry is changing very rapidly. We want to make sure we’re well-positioned. We think it’s appropriate to do it while company is strong and the economy is strong.”

The move follows a round of buyouts that GM offered to about a quarter of its U.S. salaried workforce at the end of October. GM said the cuts will boost automotive free cash flow by $6 billion by the end of 2020 and result in one-time charges of up to $3.8 billion in the fourth quarter of this year and first quarter of 2019.

GM also said that the company will cut the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year. The Chevy Volt plug-in hybrid will also be cut along with the Chevy Cruze compact, which will be made in Mexico for other markets.

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