GM announced its future plans, which include restructuring its workforce and closing underutilized assembly plants.
As part of its restructuring efforts, GM announced it will cut 8,100 salaried positions – or 15 percent of its 54,000-strong salaried workforce. These job cuts and other cost-saving measures will save approximately $6 billion by the end of 2020. The company also announced it will not allocate any products to five of its plants in 2019, and close two unidentified plants outside North America by the end of 2019. Combined, the company’s proposed plant closures and salaried personnel cuts could result in 14,700 layoffs.
General Motors stated in its Monday release that it will not allocate products to Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly in Michigan or Oshawa Assembly in Ontario, Canada as of 2019. Oshawa currently builds the Cadillac XTS and Chevrolet Impala, as well as the Chevrolet Silverado and GMC Sierra. Detroit-Hamtramck builds the Chevrolet Volt and Impala, Buick LaCrosse and the Cadillac CT6. Lordstown exclusively builds the Chevrolet Cruze. As sales have dropped on most of those models in recent years, GM’s decision to stop allocating products to those plans could affect 6,300 hourly and salaried employees, according to Automotive News.
If the plants shutter at the end of 2019, it’s likely we’ll see all these models go out of production. Apart from the previous-generation Silverado and Sierra which are phasing out anyway, all these cars are slow-selling sedans.
Canadian government responds
Canadian Prime Minister Justin Trudeau weighed in on the news of Oshawa’s potential closure if production does not continue beyond 2019:
GM workers have been part of the heart and soul of Oshawa for generations – and we’ll do everything we can to help the families affected by this news get back on their feet. Yesterday, I spoke with @GM’s Mary Barra to express my deep disappointment in the closure.
— Justin Trudeau (@JustinTrudeau) November 26, 2018
GM has been producing vehicles in Oshawa since the late 1950’s and much of the towns economy is based around the presence of GM. The brand also has its Canadian HQ in the town.
Premier of Ontario Doug Ford also released a statement on the closing, saying “I will put the highly trained, professional autoworkers in Oshawa, or anywhere else in Ontario, up against anybody else in the world. It is disappointing that GM failed to see and build upon this competitive advantage. While the company is entitled to make its own business decisions, I am confident that history will prove them wrong.”
The Ontario government also committed to helping the ousted workers find new jobs and to make sure they get the full extent of their Employment Insurance payments.
Tariffs are likely still part of the issue, as the US government still has a 25 percent tariff on Canadian steel and Canadian aluminum products which prompted Canada to counter with tariffs of their own. This is keeping the cost of business high and the Ontario government says it is talking with the Federal government to try and get these tariffs removed.
Baltimore Operations in Maryland and Warren Transmission Operations in Michigan will also go without product allocation in 2019. Combined, these plants employ more than 600 hourly and salaried employees.
CEO Mary Barra said this measure will “increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.” By restructuring its manufacturing efforts and workforce, the company hopes to address underutilization of the plants that produce slow-selling models. GM is also reducing the number of vehicle architectures it uses down to five, as well as allocating more resources to electric car development and autonomous technology.
Earlier this month, news broke that GM offered buyouts to salaried employees. That 15 percent reduction in salaried and contract staff also includes cutting a quarter of its executives. By doing that, the company aims to streamline the decision making process.
Updated 11/26/18: Included more specific information regarding how many jobs could be affected by GM’s restructuring announcement. Added statement from Canada’s Prime Minister on Oshawa’s impending closure.