GM plans to shutter 5 plants, cut jobs
Facing a drop in passenger car sales, automaker will kill off several models
General Motors is poised to end production at five plants in the U.S. and Canada, kill off several passenger cars – including the Chevrolet Impala – and slash 15 percent of its salaried workforce in a sweeping cost-cutting plan designed to boost profits and adjust to America’s changing tastes in vehicles.
The Detroit-based automaker said it would end production by the end of 2019 at its Lordstown Assembly plant in northeast Ohio, its Detroit-Hamtramck Assembly plant in southeast Michigan, its Oshawa Assembly plant in Ontario, its Baltimore Operations parts plant in Maryland and its Warren Transmission Operations plant in southeast Michigan.
The moves reflect the stark consumer shift to SUVs, crossovers and pickups. All of the GM plants on the chopping block make passenger cars.
The company will also discontinue the Chevrolet Cruze and Volt in North America as well as the Buick LaCrosse, Cadillac XTS and Cadillac CT6. While sales of those models were suffering, they continued to support thousands of jobs. GM has about 1,500 employees at the Detroit plant, 1,600 at the Lordstown factory and 2,500 in Oshawa.
About half of those workers will be
given the chance to relocate to another GM operation, the company said.
The announcement comes ahead of next year’s contract talks with the United Auto Workers union, which could potentially lead to decisions to devote vehicles to those facilities. The union vowed to fight, but there’s a serious chance the plants will close for good.
CEO Mary Barra is seeking to reposition GM for a future defined by selfdriving cars, ride-sharing networks and electric vehicles. The cuts will make GM “lean and agile” as the company aims to “lead in autonomous and lead in electric vehicles,” Barra said.
The political backlash was swift and intense. President Donald Trump said he was “very tough” on Barra in a oneon-one conversation about the decision. “This country has done a lot for General Motors,” Trump said as he departed the White House for a series of campaign events in Mississippi. “They better get back to Ohio and soon. So we have a lot of pressure on them.”
The automaker trumpeted the Volt for years as a symbol of its alternative propulsion expertise, but the company has since pivoted toward building fully battery-powered cars, such as the Chevy Bolt. The Volt, whose production model debuted about 10 years ago, still had a small gas engine paired with its battery pack.
Like the Volt, the Cruze was also described for years as an illustration of GM’s recovery after its federal bailout and bankruptcy. GM’s decision to locate Cruze production in Ohio breathed new life into the Lordstown plant and was hailed by President Barack Obama’s administration as reflective of the auto industry’s revival.
GM is keeping models such as the Chevy Malibu, Chevy Bolt, Cadillac CTS and Buick Regal.
GM deserves credit for “taking bold action” but risks losing in the long run if consumers rediscover passenger cars, said Mike Ramsey, a transportation and mobility analyst for Gartner. “There’s no guarantee that it’s going to stay SUV, SUV, SUV, SUV,” Ramsey said. “There may be a big return to sedans. So it could be problematic for them.”
Taken together, the moves will deliver more than $6 billion in additional annual cash flow by the end of 2020, GM said. That includes $4 billion in cost cuts and $1.5 billion in reduced capital expenditures.
The UAW said it would “confront this decision by GM through every legal, contractual and collective bargaining avenue open to our membership.”
It’s a “callous decision” to cut American operations about 10 years after the automaker first accepted federal bailout money, UAW GM official Terry Dittes said in a statement.
GM said it would also close two additional plants outside of North America by the end of 2019. It will also continue with plans to close its plant in Gunsan, South Korea.
The workforce reduction will affect 15 percent of the company’s salaried and salaried contract workforce. It’s not clear how many of those cuts will be voluntary and how many will take the form of layoffs. GM offered buyouts to 18,000 workers several weeks ago.
GM has 54,000 salaried workers in North America, meaning the company will cut about 8,000 of those positions, GM spokesman Pat Morrissey said.
While Morrissey declined to specify how many workers agreed to take the buyout offer, “We did not get all 8,000 of that reduction through voluntary buyouts.” GM is expected to do involuntary cuts “sometime in January,” he said. The company said it would also have 25 percent fewer executives.