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  • William Maley
    William Maley

    General Motors Announces Job Cuts and Plant Shutdowns in North America

      Five factories are on the chopping block


    This morning, General Motors announced an overhaul of its operations in 2019 which will involve cutting more than 10,000 workers and possibly closing five plants by the end of the year. GM said the cuts should boost cash flow by six billion by the end of 2020.

    “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. We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,” said GM Chairman and CEO Mary Barra in a statement.

    The plants up for possible closure are,

    • Detroit-Hamtramck Assembly in Michigan - Home to Buick LaCrosse, Cadillac CT6, Chevrolet Impala, and Chevrolet Volt.
    • Lordstown Assembly in Ohio - Home to Chevrolet Cruze.
    • Oshawa Assembly in Ontario, Canada - Home to Cadillac XTS, Chevrolet Impala, and finishing production of last-generation Chevrolet Silverado and GMC Sierra
    • Baltimore Operations in Maryland (Propulsion)
    • Warren Transmission Operations in Michigan

    Hints of this announcement came out last night when reports from CTV and The Globe and Mail in Canada reported the closure of Oshawa.

    The plant closures also mean a number of models being dropped - including the LaCrosse, CT6, Impala, and Volt. The Cruze will be built in Mexico for other markets.

    It was expected GM was going to make some changes to address the underutilization of its plants. Dara from the Center for Automotive Research says GM represents 1 million of the 3.2 million units of underutilized capacity in the U.S. through October.

    This announcement comes on the eve of negotiations with the UAW next year and Unifor in 2020. The UAW has announced that it will challenge GM's decision "through every legal, contractual and collective bargaining avenue open to our membership."

    The announcement has brought pushback from politicians. Canadian Prime Minister Justin Trudeau expressed "deep disappointment" with the decision. U.S. Senator Rob Portman, a Republican from Ohio express frustration with the possible shutdown of Lordstown.

    One group not disappointed with the news is Wall Street. GM stock rose 6.18 percent to $38.00 per share at the time of this writing.

    Source: Automotive News (Subscription Required), Bloomberg, Reuters, Twitter, General Motors


    General Motors Accelerates Transformation

    • Transforming the global enterprise to advance the company’s vision of Zero Crashes, Zero Emissions, Zero Congestion
    • Taking cost actions and optimizing capital expenditures to drive annual run-rate cash savings of approximately $6 billion by year-end 2020

    DETROIT – General Motors (NYSE: GM) will accelerate its transformation for the future, building on the comprehensive strategy it laid out in 2015 to strengthen its core business, capitalize on the future of personal mobility and drive significant cost efficiencies.

    Today, GM is continuing to take proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce. These actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis.

    “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,” said 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.”

    Contributing to the cash savings of approximately $6 billion are cost reductions of $4.5 billion and a lower capital expenditure annual run rate of almost $1.5 billion. The actions include:

    • Transforming product development – GM is evolving its global product development workforce and processes to drive world-class levels of engineering in advanced technologies, and to improve quality and speed to market. Resources allocated to electric and autonomous vehicle programs will double in the next two years. Additional actions include:
      • Increasing high-quality component sharing across the portfolio, especially those not visible and perceptible to customers.
      • Expanding the use of virtual tools to lower development time and costs.
      • Integrating its vehicle and propulsion engineering teams.
      • Compressing its global product development campuses.
    • Optimizing product portfolio – GM has recently invested in newer, highly efficient vehicle architectures, especially in trucks, crossovers and SUVs. GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade.
    • Increasing capacity utilization – In the past four years, GM has refocused capital and resources to support the growth of its crossovers, SUVs and trucks, adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs. With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year.
      • Assembly plants that will be unallocated in 2019 include:
        • Oshawa Assembly in Oshawa, Ontario, Canada.
        • Detroit-Hamtramck Assembly in Detroit.
        • Lordstown Assembly in Warren, Ohio.
      • Propulsion plants that will be unallocated in 2019 include:
        • Baltimore Operations in White Marsh, Maryland.
        • Warren Transmission Operations in Warren, Michigan.

    In addition to the previously announced closure of the assembly plant in Gunsan, Korea, GM will cease the operations of two additional plants outside North America by the end of 2019.

    These manufacturing actions are expected to significantly increase capacity utilization. To further enhance business performance, GM will continue working to improve other manufacturing costs, productivity and the competitiveness of wages and benefits.

    • Staffing transformation – The company is transforming its global workforce to ensure it has the right skill sets for today and the future, while driving efficiencies through the utilization of best-in-class tools. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making.

    Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.”

    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 $2.0 billion of employee-related and other cash-based expenses. The majority of these charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes. The majority of these charges will be incurred in the fourth quarter of 2018 and first quarter of 2019, with some additional costs incurred through the remainder of 2019. 

    Edited by William Maley

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    1 hour ago, ocnblu said:

    Drove a customer's 2018 Equinox LT AWD 1.5t today, around the block.  I am not missing anything.

    So just like your Jeep appliance then! ;) 

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    4 minutes ago, dfelt said:

    So just like your Jeep appliance then! ;) 

    Yup except my appliance at least has a stick shift.

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    3 minutes ago, ocnblu said:

    Yup except my appliance at least has a stick shift.

    Which is a rarity in any CUV or SUV nowadays...it's cool to see the new Gladiator is available w/ a V6/manual combo.  Would like to see more sticks available. 

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    On 12/2/2018 at 3:05 PM, dfelt said:

    CUVs / SUVs that are pure electric will sell and sell in quantity. Example is China where they are selling millions a year of Electric SUV/CUVs as that is what consumers want and clearly here as well. 

    Jaguar and I fully expect once they are available Mercedes-Benz will sell all they make of their CUV EVs.

    China sold 770K EVs in 2017, not "millions". But that market is also 70% comprised of smaller than 1.6 liter cars. It's not comparable to the USDM, where we're struggling to move 200K EVs and have loads of 6 and 8 cylinder vehicles. China is not a template that fits the USDM.

    Mercedes has pushed numerous hybrid cars that have done poorly among other hybrid cars. I have not seen any evidence their next attempt with EVs is going to do much better, but we'll see. They are playing catch up, and have been showing steady slipping sales; perhaps buyers in those price tiers are growing tired of mercedes.

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    2 hours ago, balthazar said:

    China sold 770K EVs in 2017, not "millions". But that market is also 70% comprised of smaller than 1.6 liter cars. It's not comparable to the USDM, where we're struggling to move 200K EVs and have loads of 6 and 8 cylinder vehicles. China is not a template that fits the USDM.

    Mercedes has pushed numerous hybrid cars that have done poorly among other hybrid cars. I have not seen any evidence their next attempt with EVs is going to do much better, but we'll see. They are playing catch up, and have been showing steady slipping sales; perhaps buyers in those price tiers are growing tired of mercedes.

    Where did you get your China Number as I know there is fluctuation between different reporting outfits.

    The millions on the road and 1.23 million sold last year from both domestic and foreign brands comes from:

    https://www.statista.com/chart/14098/electric-car-sales-are-surging-in-china/

    http://www.ev-volumes.com/country/china/

    It is interesting to see where they go and you are correct what works in China is not going to work in the US. Very different dynamics and expectations. They have a young auto culture and so EVs I expect to catch on faster than in the US with the Baby boomers and 50-60 year olds resisting change.

    2 hours ago, ocnblu said:

    Yup except my appliance at least has a stick shift.

    That is just cause we know you love a stick with a knob on it! ;) 

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    AND The Other Shoe Drops, Bloomberg is reporting that under review from Morgan Stanley, Fords $11 Billion restructuring could cost 25,000 employees their jobs, exceeding GMs cutbacks.

    https://www.bloomberg.com/news/articles/2018-12-03/morgan-stanley-predicts-ford-to-cut-25-000-jobs-in-restructuring

    Morgan Stanley says the largest portion will be in Europe of cutting if not closing Ford of Europe, a business that currently has a NEGATIVE $7 Billion value. Europe is bleeding Ford.

    Per Ford's announced restructuring that the 70,000 salaried employees will face unspecified job losses beginning in the middle of next year as Ford works through their reorg. 

    Starting in early Spring of next year Ford will cut shifts at two U.S. Factories and transfer som workers to plants building Big SUVs and Transmission for pickups.

    To Quote Morgan Stanley:

    Jonas said other automakers will be forced to follow GM’s and Ford’s actions as the industry transforms, first to abandon factories building slow-selling sedans and ultimately to retool to build electric and self-driving vehicles.

    “We believe existential business model risk will be prioritized over near-term profits and cash return,” Jonas wrote. “We still do not believe investor expectations have fully considered the near-term earnings risk.”

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    Its interesting, but perhaps premature, to see journalistic sources continue to zip tie electrics and autonomous vehicles together, when 1. they really don't have anything to do with each other technologically, and 2. at least EVs are real and finding a few buyers. The autonomous thing is still a pipe dream WRT building a whole different type of car from a manufacturing standpoint. True AD vehicles are going to trail EVs by decades. There's plenty of time.

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    On 12/2/2018 at 7:19 PM, riviera74 said:

    The best way to prove ocnblu wrong is simple: replace the Volt with an Equinox-sized CUV at Equinox prices.  Then watch the sales over the next two years.

    It's called the Kia Niro... 

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    12 hours ago, balthazar said:

    Its interesting, but perhaps premature, to see journalistic sources continue to zip tie electrics and autonomous vehicles together, when 1. they really don't have anything to do with each other technologically, and 2. at least EVs are real and finding a few buyers. The autonomous thing is still a pipe dream WRT building a whole different type of car from a manufacturing standpoint. True AD vehicles are going to trail EVs by decades. There's plenty of time.

    Fully autonomous is still a decade away from the mainstream, but semi-autonomous or "highway only" autonomous? That'll be mainstream a lot faster than you think.  Cadillac's SuperCruise is already that fantastic. Of the around 350 miles from my place to a destination in NY, the CT6 drove most of it and I only had to pilot it myself for about 30 of those miles. 

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    20 hours ago, ocnblu said:

    Drove a customer's 2018 Equinox LT AWD 1.5t today, around the block.  I am not missing anything.

    Agree on that front....

    18 hours ago, ocnblu said:

    Yup except my appliance at least has a stick shift.

    And rocking like an out of balance washing machine on spin cycle....

    • Haha 1

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    2 hours ago, Drew Dowdell said:

    Fully autonomous is still a decade away from the mainstream, but semi-autonomous or "highway only" autonomous? That'll be mainstream a lot faster than you think.  Cadillac's SuperCruise is already that fantastic. Of the around 350 miles from my place to a destination in NY, the CT6 drove most of it and I only had to pilot it myself for about 30 of those miles. 

    I've seen the vids on SuperCruise.
    Like you said- a handful offer the option, but it's extremely limited; 95% of the time it'll never/cannot be used, and it doesn't change the manufacturing aspect. It's a gimmick right now.

    Fully autonomous, level 5 cars may well require different/dedicated manufacturing (I actually don't think so), but that's much farther out than a mere 10 years to be 'mainstream'. It's still weird how the 2 are being so readily velcro'd together.

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    Hi, I am searching for a car company that is wise enough to know that product comes before shareholder value.  One that knows that with excellent product out front, shareholder value naturally follows.  Because GM hasn't cared about product as much as share value in... gosh, I don't know when.  It's been a while.  Honda?  Toyota?  Subaru?  FCA?  Where should I land?

    6 hours ago, Drew Dowdell said:

    It's called the Kia Niro... 

    ...and just look at it FLYING OFF THE LOTS LOL!!!

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    The flip side is that increased stock valuation gives that company more capital to develop excellent out front product.
    Where would Tesla's products be if the stock was valued all along like it should be, via the fundamentals; below that of Ford?

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