Waiting for the next shoe to drop
Automaker signalling it isn’t finished with cuts, strategic shifts
DETROIT— Turns out no one keeps a secret as well as General Motors’ leadership.
On Nov. 20, the automaker’s board of directors approved a massive cost-cutting plan that included shuttering two assembly plants in the United States, one in Canada and two U.S. propulsion plants by the end of next year. Combined with white-collar cuts, about 14,000 hourly and salaried jobs are affected.
GM waited until Nov. 26 to tell the world its plan, though the news that GM would close its plant in Oshawa leaked out late Sunday, Nov. 25.
Some workers expressed anger at learning about their plants closing from news reports or texts, though GM told the Detroit Free Press Wednesday that it The General Motors assembly plant in Oshawa. With this week’s announcements, an industry expert predicts there will be more changes to follow as the GM lays out its full plan.
gave the UAW a heads up Monday morning before its 10:30 a.m. public announcement.
“How they kept this a secret is shocking, to say the least,” said Ivan Drury, senior manager of industry analysis at Edmunds.
Given that the automaker said it will continue to hire people for jobs related to the development of electric vehicle and autonomous vehicle technology even as it cuts other jobs, Drury warned, “There’s definitely more to come, but it depends on where GM places its bets for the future.”
Expect more job cuts and other operational shifts next year, he said. “All those are possible until the full plan is laid out,” Drury said.
Adding to the unknown is GM’s new chief financial officer, Dhivya Suryadevara, who took the role Sept. 1. Analysts said she likely played a big role as an architect to this plan.
The UAW was surprised that GM kept the plan hushed for a full six days, but it has “long been concerned about the strategic investments without flexibility of product drive train in U.S. plants and the continuous movement of product by GM, such as the (Buick) Envision in China and product announcements in Mexico,” UAW spokesperson Brian Rothenberg said in an email.
GM will close Detroit-Hamtramck, Lordstown in Ohio, and Oshawa by the end of 2019. Including 645 jobs at transmission plants in Warren and near Baltimore, more than 6,200 hourly jobs are at stake.
Most UAW workers will have an opportunity to transfer to other factories, including Flint and Arlington, Texas, where indemand trucks are produced.
The plants being idled make cars that are out of favour with consumers, including the Chevrolet Volt, Cruze and Impala, the Buick LaCrosse and Cadillac XTS.
In addition to the production cuts, GM said it will reduce its North American white-collar workforce by about 8,000. The deadline passed on Nov. 19 for a voluntary buyout for those workers. GM said 2,250 employees have asked to take the offer. That means as many as 5,750 workers could be cut if the company keeps to its announced total. The cuts are expected in mid-January.
Rothenberg said that the UAW discussed the affected plants with GM in the past and drew a clear “line in the sand on U.S. plants.” “This was long planned through intentional strategic investment decisions and product movement over our objections,” Rothenberg said. “They may have kept the news about it quiet, but this was planned and had to be gradually executed long before sales numbers were known.”
Industry experts said GM’s secrecy about the cost-cutting plan is impressive, but the plan itself should not be surprising. “One-shift plants are not financially sustainable,” said Kristin Dziczek, vice-president of Industry, Labor & Economics at the Center for Automotive Research in Ann Arbor.
The U.S. market is not growing and consumers prefer SUVs to sedans, Dziczek said.
Both Dziczek and Edmund’s Drury said GM’s new CFO Suryadevara was likely instrumental in devising the plan that GM said will save $6 billion by the end of 2020.
“Given her tenure within the company, she likely had a good pulse on what changes needed to be made even before becoming CFO,” Drury said. “There’s no doubt she played a significant role in implementing these changes.”