General Motors sheds 14,000 jobs from global workforce amid changing demand for cars
27th Nov 2018
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 focus more on autonomous and electric vehicles.
- GM’s job losses will largely come from white-collar workers, representing 8,000 jobs
- The restructure is likely to be followed by Ford, which will also cut its corporate workforce
- US President Donald Trump urges GM to bring in more work to Ohio, where a plant is at risk of closure
The reductions could amount to as much as 8 per cent of GM’s global workforce of 180,000 employees.
The restructuring reflects the changing US and North American auto markets as manufacturers continue a dramatic shift away from cars toward SUVs and trucks.
The reduction includes about 8,000 white-collar employees, or 15 per cent of GM’s North American white-collar workforce.
At the factories, around 3,300 blue-collar workers could lose jobs in Canada and another 2,600 in the US, but some US workers could transfer to truck or SUV factories that are increasing production.
The company also said it would stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.
General Motors shut down its Australian manufacturing arm in October 2017, closing its Adelaide plant and placing 944 people out of work.
Company moves to beat next economic downturn
General Motors’ pre-emptive strike to get leaner before the next downturn likely will be followed by Ford Motors, which has said it is restructuring and will lay off an unspecified number of white-collar workers.
Toyota also has discussed cutting costs, even though it is building a new assembly plant in Alabama.
GM is not 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 US in the coming years.
Itay Michaeli, an analyst with Citi, said GM was shedding six makes of car largely because it does not make money on them.
“We estimate sedans operate at a significant loss, hence the need for classic restructuring,” he wrote in a note to investors.
In October, almost 65 per cent of new vehicles sold in the US were trucks or SUVs. That figure was about 50 per cent cars just five years ago.
Shares of GM, the largest automaker in the US which sells the Chevrolet, Buick, Cadillac and GMC brands, rose nearly 6 per cent on the news.
GM does not 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,” chief executive Mary Barra told reporters.
Many of the jobs to be lost are related to conventional cars with internal combustion engines.
Ms Barra said the industry was changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM would have to adjust.
She said GM was still hiring people with expertise in software and electric and autonomous vehicles.
Ms Barra also noted that tariffs on imported aluminium and steel had hit the company, but she stopped short of saying they had anything to do with the restructuring.
‘They better put something else in’: Trump makes demands
US President Donald Trump demanded General Motors add a new product to replace a plant in Ohio that the company said it planned to close next year due to lagging small-car demand.
“I have no doubt that in the not too distant future, they’ll put something else. They better put something else in,” Mr Trump said.
Mr Trump separately told the Wall Street Journal that GM should stop making cars in China and make them in the United States instead.
The US President told reporters that he told Ms Barra he was unhappy with the announcement.
He said the decision to halt sales of the Chevrolet Cruze had “nothing to do with tariffs” but was because of poor sales.
“Get a car that is selling well and put it back in,” Mr Trump said.
GM currently builds just one vehicle in China that it exports to the United States — the Buick Envision.
The company has sold about 22,000 through September and in August sought an exclusion from 25 per cent US tariffs imposed on Chinese vehicle imports. The Trump administration has not yet ruled on the request.
At a rally near the Lordstown plant last summer, which is facing closure, Mr Trump told people not to sell their homes because the jobs are “coming back. They’re all coming back.”