News

GM to slash jobs and close eight plants

Written by admin

General Motors (GM) plans to halt production at five factories in North America and cut more than 14,000 jobs.

The US carmaker has also announced it will close three plants outside North America by the end of 2019.

The moves follow rising costs and slower car sales and come as the firm focuses on its line-up of trucks, electric and self-driving vehicles.

The company said the plan would help it save about $6bn (£4.7bn).

The cutbacks include a 15% reduction in the number of its salaried employees, including 25% fewer executives.

The five plants in North America alone employ about 7,000 people currently, including more than 6,000 shift workers.

“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 chair and chief executive Mary Barra.

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

Why is the company doing this?

The production cuts come as buyers in North America have turned away from smaller cars to bigger vehicles such as SUVs and trucks, which now make up nearly 70% of total US car purchases.

Ms Barra said GM wants to invest in electric and autonomous vehicles, which are expected to drive future industry growth.

She is also responding to rising costs – including from new tariffs on materials such as steel – while preparing the firm for the next downturn, after US car sales peaked in 2016.

What are the details?

GM said it is cutting production of the Buick LaCross, Chevrolet Impala and Cadillac CT6 and XTS – all sedans – as well as the Chevrolet Volt and older versions of the Silverado and Sierra.

The closures in North America include an assembly plant in Oshawa, Canada; facilities in Detroit and Warren in Michigan; a plant in Warren, Ohio and a site near Baltimore in Maryland.

It is also closing a factory in South Korea, as announced in February, as well as two other international facilities that were not specified.

General Motors currently employs about 54,000 salaried workers in North America – which means the cuts are likely to affect more than 8,000 salaried staff, in addition to more than 6,000 shift workers at the plants.

The firm had signalled some of its plans previously, offering voluntary buyouts to up to 18,000 workers in October.

Analysis by Michelle Fleury

GM boss Marry Barra said the firm was embarking on the cuts to “keep ahead of changing market conditions”.

Some of those changing conditions have little to do with the White House.

But others do.

Take the tariffs on steel – a key component in the production of cars. They have pushed up GM’s costs by an estimated $1bn.

Then there are shifting trade agreements and the president’s proposal to raise tariffs on imported cars.

New tax cuts passed last year were designed to encourage companies like GM to invest at home, but today’s announcement signals the lower tax rates are not enough to offset rising expenses.

So while investors may cheer today’s moves as a boost to GM’s bottom line, they’re a blow to President Trump and his many boasts about bringing car industry jobs back.

What is the response?

On Monday, Prime Minister Justin Trudeau said he called Ms Barra to express his “deep disappointment” in the closure of the Canadian GM plant, which has been in the province of Ontario for a century.

In the US, Senator Sherrod Brown, a Democrat who represents Ohio, called the decision “corporate greed at its worst”.

Labour unions in the US and Canada also said they would press the company to allocate more work to the factories, instead of closing them.

“To be clear, [we do] not accept the closure of the plant as a foregone conclusion,” labour leaders at the Oshawa factory in Canada wrote to their members.

“Remember, our plant has been in this situation before with no product on the horizon and we were able to successfully campaign for continued operations.”

Terry Dittes, vice president of the UAW, said GM had made a “callous decision” that put “profits before the working families of this country”.

Shares in the company jumped more than 5% after the announcement.

Let’s block ads! (Why?)


Source link

About the author

admin

Leave a Comment