GM to idle five factories and axe 14,000 jobs
Move draws fire from President Trump
General Motors Co said on Monday that it planned to idle five factories in North America and cut more than 14,000 bluecollar and salaried jobs in a bid to trim costs.
The action follows similar job-cutting moves by Ford Motor Co in the face of slowing sales and a shift in consumer tastes, driven in part by low gasoline prices.
The five GM plants will halt production next year, resulting in the lay-off of 3,300 production workers in the United States and about 3,000 in Canada. The company also aims to trim its salaried staff by 8,000.
“We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions,” Mary Barra, GM’s chief executive officer, said in a conference call.
The plants include three car factories: one in Lordstown, Ohio, that makes the Chevrolet Cruze compact; the DetroitHamtramck plant, where the Chevrolet Volt, Buick LaCrosse and Cadillac CT6 are produced; and a plant in Oshawa, Ontario, which primarily makes the Chevrolet Impala. In addition, the company will halt operations at transmission plants in the Baltimore area and in Warren, Michigan.
Some of the affected plants could resume production, depending on the outcome of contract negotiations with the United Auto Workers union next year.
The cuts drew fire from President Donald Trump, who vowed early in his term to increase automaking jobs and brought pressure on the industry not to shift work to Mexico and overseas.
Referring to Barra, he said: “I spoke with her when I heard they were closing and I said, ‘You know, this country has done a lot for General Motors. They better get back to Ohio and soon’.”
Trump also invoked the government’s rescue of GM after its bankruptcy filing almost a decade ago.
“You know, the United States saved General Motors,” he told reporters, “and for her to take that company out of Ohio is not good. I think she’s going to put something back in soon.”
The cutbacks also drew protests in Canada. Within an hour of GM’s announcement, workers walked out of the Oshawa plant into a driving rain. Waving red flags and clad in ponchos bearing the logo of their union, Unifor, they began blockading truck entrances.
Prime Minister Justin Trudeau said he had expressed his “deep disappointment” about the closing to Barra. “The government is looking at measures to help jobless GM workers get back on their feet.”
For the past several years, as gas prices have remained low, consumers have gravitated toward bigger, roomier vehicles like pickup trucks and SUVs. Demand for small and mid-sized cars has plunged.
Ford said this year that it would stop making sedans for the North American market and announced cuts in its workforce.
The companies have also paid a price for the tariff battle Trump set in motion. In June, GM slashed its profit outlook for the year because tariffs on steel were driving up its costs. The company does not import a great deal of steel into the United States, but the increased demand for domestic steel has raised prices.
Barra said GM would set aside up to $2 billion in cash to pay for the job reductions and take non-cash charges against its pretax earnings of about $1.8 billion. The charges will affect earnings in the fourth quarter of 2018 and the first quarter of 2019.
Until last month, GM had been offering severance packages to entice salaried employees in North America to leave the company.
In January, the company plans to cut additional white-collar jobs on an involuntary basis. Between the two actions, it aims to eliminate 8,000 salaried jobs, or about 15% of its white-collar workers in North America.
The UAW is preparing to negotiate new contracts with GM, Ford and Fiat Chrysler Automobiles NV next year. In recent years, the union has agreed to concessions in exchange for promises by the manufacturers to keep plants open.
The union said GM’s move “will not go unchallenged.”
“Closing American plants while expanding production in China and Mexico is profoundly damaging to our American workforce,” said Terry Dittes, the union vice president in charge of negotiations with GM.
Overall, the auto industry has added nearly 350,000 jobs since the industry bottomed out in the wake of the Great Recession, with most of that growth coming under former president Barack Obama. But the industry still employs tens of thousands fewer people than before the crisis, and hundreds of thousands fewer than in 2000.
About 970,000 Americans worked in the US auto industry in October, an increase of 12,800 since Trump took office in January 2017.
Most of that growth, however, came in one corner of the industry, manufacturers of recreational vehicles and trailers.
Makers of auto parts have added about 2,000 jobs during that time. But through October, automakers like GM had cut about 7,000 jobs under Trump, government figures show. (Those numbers do not include the hundreds of thousands of workers employed by auto dealers, repair shops and related industries.)
The cutbacks in Canada were particularly sensitive because of politics, labour relations and history.
GM Canada is headquartered i n Oshawa, an industrial town east of Toronto, where it was founded in 1907 by a wagonmaker who licensed Chevrolet designs. Before a series of cutbacks started in the 1980s, its factories and engineering centers in Oshawa employed upward of 40,000 people.
GM was the largest vehicle producer in Canada until it was eclipsed by Toyota Motor Corp last year. An overwhelming majority of cars and trucks made in that
country are exported to the United States.
Although Canada and the province of Ontario took part in the GM rescue after its bankruptcy filing and have repeatedly helped fund improvements to the Oshawa plant, Canadian political leaders offered little hope that they could reverse the company’s decision.
Doug Ford, the premier of Ontario, said a GM official had told him, “The ship has already left the dock.”
The future of the plant has appeared to be in jeopardy at points in the past. But optimism about its future was restored in 2016 when GM made a $554 million investment in the operation as part of its contract settlement with Unifor.
Little of that sentiment was to be found on Monday.
“The last thing we want to do is walk off the line, we really don’t want to do that,” said Eva McKeen, an inspector in the plant’s paint shop. “We just want GM to work with us to — I don’t know. Just as you’re getting older, to know that you don’t have a job, it’s really heart wrenching.”
GM also said on Monday that it would stop production at two unspecified plants outside North America by the end of next year.