In a move that stunned many, General Motors announced a plan to cut rising costs and help it avoid bankruptcy amid declining car sales.
The carmaker said it’s putting more stock in future vehicle technologies, such as electric and self-driving cars. General Motors also announced that it’s “unallocating” its factories in Oshawa, Ontario, Canada; Detroit; Warren, Ohio; White Marsh, Maryland; and Warren; Michigan. It will close two more factories outside North America by the end of 2019.
The announcement also included heavy news for General Motors’ workforce.
More than 6,000 blue-collar jobs will be hit by GM plans to stop production at a car plant in Canada and two more in Ohio and Michigan. Two transmission plants in the US will also be mothballed, putting the future of those plants in doubt.
The cuts will also include 15% of GM’s 54,000 white-collar workforce, about 8,100 people, and come as 18,000 GM workers have been asked to accept voluntary redundancy.
On Monday, General Motors tweeted:
Today we announced new actions to accelerate our transformation to help create a #ZeroCrashes, #ZeroEmissions and #ZeroCongestion world. That means making hard decisions now to stay ahead of changing market conditions, positioning us to lead the future. https://t.co/nzTLlqTPjC
— General Motors (@GM) November 26, 2018
Today, GM is continuing to take proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce. These actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis.
“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,” said GM Chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
Along with doubling its resources to develop electric and self-driving vehicles, the carmaker said it’s slimming its offerings, killing off (at least in the United States) several passenger cars including the Chevrolet Cruze, Cadillac XTS, Chevrolet Impala, Buick LaCross, Chevrolet Volt and Cadillac CT6.
GM’s (GM) new motto is “Zero Crashes, Zero Emissions, Zero Congestion,” signaling a shift to self-driving, electric vehicles. But the restructuring is also about making cars people want now. Customers are increasingly shunning sedans in favor of SUVs and hatchbacks.
Though General Motors led with changes to its vehicle offerings and focused on future technologies as the first steps to its $6 billion cost-cutting plan, closing five North American plants and slashing nearly 15,000 jobs make up the bulk of its savings.
The company dropped the news in corporate copy laden with jargon:
Increasing capacity utilization – In the past four years, GM has refocused capital and resources to support the growth of its crossovers, SUVs and trucks, adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs. With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year.
… These manufacturing actions are expected to significantly increase capacity utilization. To further enhance business performance, GM will continue working to improve other manufacturing costs, productivity and the competitiveness of wages and benefits.
Staffing transformation – The company is transforming its global workforce to ensure it has the right skill sets for today and the future, while driving efficiencies through the utilization of best-in-class tools. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making.
Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.”
The Guardian reported:
“We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions,” Barra said in a conference call. GM’s share price rose 5.5% on the news.
… Michelle Krebs, an executive analyst at Autotrader, said Barra was “trying to get ahead of a potential crisis by making cuts now”. She said a confluence of factors had triggered GM’s actions: a downturn in the important China market and a potential downturn in the North American market; the dramatic shift by consumers from traditional cars to utility vehicles; and the impact of tariffs and trade issues.
General Motors’ moves might have bolstered investor trust, but it also brought a swift wave of criticism from employees, politicians and social media users.
CNN Business reported:
GM’s unions aren’t happy. The union that represents its Canadian workers said in a statement that GM’s expected decision does not “live up to the spirit” of certain commitments the company made to union members during 2016 contract negotiations. Some workers at the Oshawa plant walked off the job Monday.
The four American plants employ a combined 3,800 hourly and salaried staff, and the Oshawa facility employs 2,900. The Detroit-Hamtramck facility is GM’s last in the city, and the Lordstown plant in Ohio was one of its biggest.
The United Autoworkers union said it would fight the decision.
“This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce,” said Terry Dittes, UAW vice president.
The United Auto Workers union called the closures “callous” and vowed to fight them. And President Donald Trump expressed his displeasure and said he told Barra personally to reinvest in Ohio, in particular.
“This country has done a lot for General Motors,” Trump said as he departed the White House for a series of campaign events in Mississippi. “They better get back to Ohio and soon. So we have a lot of pressure on them.”
Canadian prime minister Justin Trudeau tweeted:
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. Yesterday, I spoke with @GM’s Mary Barra to express my deep disappointment in the closure.
— Justin Trudeau (@JustinTrudeau) November 26, 2018
I had a good call with Premier Ford today – we’re united in support for workers in Oshawa, and we’ll work together to do everything we can to help the people and communities affected.
— Justin Trudeau (@JustinTrudeau) November 26, 2018
Many Twitter users are lashing out with critical comments on recent General Motors’ tweets, including one that wished the carmaker’s workforce a good Thanksgiving:
Really? You just ruined Christmas for 3,000 families in Ontario, Canada. Grinch!
— Corey (@seeya2015) November 26, 2018
After years of tax breaks and bailouts,you close a plant that has been a life force for a city for 100 years. ultimately costing 3000 or more people their jobs #GM #Oshawa. Just another american company taking advantage of Canada
— 0 (@_Pumpkin_Spice_) November 26, 2018
Seriously??? GM Family First??? Ha! Shame on you GM! You’re proud to announce that you are building a new product in Mexico, while telling American GM employees that they will no longer have a job after March, 2019. You SHOULD be proud!!!! Do you believe in karma, Bara?
— Katherine Shick (@kathys47) November 26, 2018
Peaceful wishes? No. Your actions today have caused nothing but FEAR & ANXIETY for thousands of hard working families. Great timing too, just a MONTH BEFORE CHRISTMAS. Happy Holidays you insensitive, insincere and classless f’ing morons.
— Sbadoh (@sbadoh) November 26, 2018
Instead of wishing them a safe and peaceful Thanksgiving why not make their jobs secure? Bring in SUV’s and other larger vehicles to the plants you’re closing?
— PJ KROPP (@KroppPj) November 27, 2018
What do you think of General Motors’ announcement, Ragan/PR Daily readers?