GM cuts jobs to focus on electric vehicles, future innovation

Even though unemployment is low, the economy is growing and US auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation.

It is the new reality for automakers faced with the cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles.

GM announced on Monday that it would cut as many as 14,000 workers in North America and put five plants up for possible closure as it restructures to focus more on autonomous and electric vehicles.

CEO Mary Barra said that as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines.

“The vehicle has become much more software-oriented,” she said. “We still need many technical resources in the company.”

The reductions could amount to as much as 8 percent of GM’s global workforce of 180,000 employees.

The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the US were trucks or SUVs. That figure was about 50 percent cars just five years ago.

GM is shedding cars largely because it doesn’t make money on them, Citi analyst Itay Michaeli wrote in a note to investors.

“We estimate sedans operate at a significant loss, hence the need for classic restructuring,” he wrote.

The reduction includes about 8,000 white-collar employees, or 15 percent of GM’s North American white-collar workforce.

At the factories, around 3,300 blue-collar workers could lose jobs in the US and another 2,600 in Canada, but some US workers could transfer to truck or SUV factories that production.

The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and

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increasing another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries.

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,” Barra said.

Factories that could be closed include assembly plants in Detroit and Oshawa, Ontario, and Lordstown, Ohio, as well as transmission plants in Warren, Michigan, and near Baltimore.

The announcement worried GM workers who could lose their jobs.

“I don’t know how I’m going to feed my family,” Matt Smith, a worker at the Ontario factory, said on Monday outside the plant’s south gate, where workers blocked trucks from entering or leaving. “It’s hard. It’s horrible.”

Workers at the Ontario plant walked off the job on Monday, but were expected to return on Tuesday.

Most of the factories to be affected by GM’s restructuring build cars that will not be sold in the US after next year. They could close or they could get different vehicles to build. Their futures will be part of contract talks with the United Auto Workers union next year.

The Detroit-based union has already condemned GM’s actions and threatened to fight them “through every legal, contractual and collective bargaining avenue open to our membership.”

Bobbi Marsh, who has worked at the Ohio plant since 2008, said she can’t understand why the factory might close given the strong economy. “I can’t believe our president would allow this to happen,” she said.