GM to Shutter Five Plants, At Least 14,000 Job Cuts Planned
GM also notes that in addition to the previously announced closure of its assembly plant in Gunsan, Korea, GM will cease operations at two additional plants outside North America by the end of 2019.
DETROIT—In another blow to the Trump administration’s efforts to bolster the manufacturing sector, General Motors reports it plans to shutter a total of five assembly and propulsion plants, including four facilities in the United States.
The automaker reports that as part of its ongoing transformation process, it will reduce its global workforce by 15% or more than 14,000 workers. The job cuts at GM come as Ford is also expected to institute workforce reductions in the tens of thousands in response to a number of market forces, including approximately $1 billion in losses tied directly to the metal tariffs imposed by the Trump administration. Ford has denied published reports that it intends to cut 20,000 jobs, but has yet to detail specifics regarding its planned workforce reductions.
GM says it will halt production in 2019 at the Detroit-Hamtramck Assembly in Detroit and the Lordstown Assembly in Warren, OH, as well as the Oshawa Assembly in Oshawa, Ontario, Canada.
The company also plans to close two propulsion plants next year—the Baltimore operations in White Marsh, MD and the Warren transmission operations in Warren, MI. GM also notes that in addition to the previously announced closure of its assembly plant in Gunsan, Korea, GM will cease operations at two additional plants outside North America by the end of 2019.
The planned global job cuts include 25% of its executive workforce or more than 8,000 positions.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” says GM chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
The actions are expected to generate cash savings of approximately $6 billion, including $4.5 billion from cost reductions and $1.5 billion from a lower capital expenditure annual run rate.
In the third quarter ended Oct. 30, GM reported revenue of $35.8 billion, up 6.4% from third-quarter 2017. GM expects to fund the restructuring costs through a new credit facility that will further improve the company’s strong liquidity position and enhance its financial flexibility.
GM expects to record pre-tax charges of $3.0 billion to $3.8 billion related to these actions, including up to $1.8 billion of non-cash accelerated asset write-downs and pension charges, and up to $2 billion of employee-related and other cash-based expenses.’’
According to a published report in USA Today, GM also reports that it plans to discontinue sales of its Chevy Volt (semi-electric) and Cruze compact models, as well as the Impala sedan in North America.
GM in its announcement did not cite the metal tariffs as one of the factors leading to the plant closures and job cuts, instead stating, “With changing customer preferences in the US and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year.”
The United Auto Workers condemned the plant closures and job cuts, saying they will not go unchallenged by the labor union.
“This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce,” states Terry Dittes, UAW vice president, director GM Department. “GM’s production decisions, in light of employee concessions during the economic downturn and a taxpayer bailout from bankruptcy, puts profits before the working families of this country whose personal sacrifices stood with GM during those dark days. These decisions are a slap in the face to the memory and recall of that historical American made bailout.”
GM assembles cars, trucks and crossover vehicles outside of the United States for sales to American consumers. GM currently assembles versions of the full-size Chevy and GMC pickups in Mexico. In addition, the Buick Cascada is assembled in Poland and the Buick Envision is assembled in China only to be imported to the U.S. for American sales, the UAW states. Recently, GM announced the new Chevy Blazer will also be assembled in Mexico and imported to the United States for American sales.
“We must step away from the anti-worker thinking of seeking simply the lowest labor cost on the planet,” says UAW president Gary Jones. “The practice of circumventing American labor in favor of moving production to nations that tolerate wages less than half of what our American brothers and sisters make, must stop. More importantly, we must understand that these companies, including GM, are no longer in trouble. They are recording annual profits in the tens of billions.”