GM News: General Motors Announces Job Cuts and Plant Shutdowns in North America

[William Maley]

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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

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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. 

View full article

[David]

Totally makes sense to close underutilized plants. The golden age of Industrialization are over for the US and the growth will be in China for GM. Efficient Agile manufacturing will come with the new skateboard platform GM will probably use for BOLT 2.0 and all other EV / Hybrid auto's. My gut says this is only the beginning for all automakers. Expect this same kind of announcement to become common over the next 18 months as auto companies realign production for the new global market change to EV/Hybrid auto's.

[frogger]

I was a little surprised about the CT6 but then it hasn't been selling much.  Where will the CT4/5 be built?

 

 

[David]

3 minutes ago, frogger said:

I was a little surprised about the CT6 but then it hasn't been selling much.  Where will the CT4/5 be built?

I am actually not surprised by the CT6 being discontinued. The car is great for a car, but really does not bring anything new or revolutionary to the car market that is dwindling as most move to CUV / SUV type auto's or Crew Cab pickups to support family hauling and stuff hauling.

My gut is telling me we will see some very big surprises out of GM with their EV auto launches.

Heart and soul of auto's in the future will be Hybrids and pure EVs with speed.

[William Maley]

7 minutes ago, frogger said:

I was a little surprised about the CT6 but then it hasn't been selling much.  Where will the CT4/5 be built?

 

Don't know at the moment, my guess would have been Detroit-Hamtramck. But now I wonder if Lansing could do it.

[smk4565]

First off, I feel bad for the folks that are losing their jobs.   These big corporations lobbied for and got the tax cuts under the guise of "we'll bring the jobs and money back to the US" but we all knew that wasn't going to happen. 

As far as the products go, I would be surprised for the Volt to be totally killed, I could see the Volt becoming a pure EV sedan, something bigger than the Bolt and maybe not as big as a Malibu.  I think the CT6 could move production to another plant, possibly even China and import.  I don't think they will totally kill that product.

The LaCrosse, Impala, XTS, Cruze I think are all dead.  Buick can get by with 1 sedan and they'll probably just do a Malibu clone to replace the current Regal/LaCrosse, maybe they recycle one of those name plates.

[Suaviloquent]

Damn. And they’re not even allocating better selling products to those plants.

[David]

Just now, Suaviloquent said:

Damn. And they’re not even allocating better selling products to those plants.

Yet they are underutilized plants that are probably costing more money than they make and with a JIT / Agile manufacturing system, you can do more with less plants. This makes sense.

7 minutes ago, smk4565 said:

First off, I feel bad for the folks that are losing their jobs.   These big corporations lobbied for and got the tax cuts under the guise of "we'll bring the jobs and money back to the US" but we all knew that wasn't going to happen. 

As far as the products go, I would be surprised for the Volt to be totally killed, I could see the Volt becoming a pure EV sedan, something bigger than the Bolt and maybe not as big as a Malibu.  I think the CT6 could move production to another plant, possibly even China and import.  I don't think they will totally kill that product.

The LaCrosse, Impala, XTS, Cruze I think are all dead.  Buick can get by with 1 sedan and they'll probably just do a Malibu clone to replace the current Regal/LaCrosse, maybe they recycle one of those name plates.

I totally agree with you in regards to the workers, but the North America market is not going to grow like China will and sedans are going to dwindle, not die, but no need for the large diverse selection out there based on how people live now. I expect the German brands to reduce car types too in the near future.

LaCrosse, Impala, XTS and Cruze I agree will probably die. Volt is also understandable as if your over 5'8" tall it is really cramped in the front and especially the back. The VOLT power train will live on in a CUV replacement is my guess. I do think your statement of a Malibu Hybrid Volt Power train makes sense as does a rebadge for Buick of the same auto.

[A Horse With No Name]

4 minutes ago, Suaviloquent said:

Damn. And they’re not even allocating better selling products to those plants.

Nope....Lordstown is a gonner I think. Sadly. 

[Cmicasa the Great]

I read this slightly different.. as I though the plan all along was to consolidate plants.. It makes zero sense to kill the Cruze, Volt, and CT6.. and still continue making the Spark and Sonic.. unless what is going on is these products are simply being moved. Product is shifting.. these non-enthusiastic drivers LOVE CUVs.. hence Ford's exodus from the car market.. but we have a CT3 and CT5 on the way.. the death of the XTS means without the CT6 after 2020... what's going to happen? MY guess.. on that note would be that someone got the message that if U are going to directly compete with the other lux brands.. it makes no sense to have a CT3, CT5, CT6.. and then intro a CT7. Could it be that the CT6, a vehicle that was misnamed in the first place.. will simply morph into a CT7 ?

I'm an optimist tho.. something that is not looked upon in high regard when it comes to GM

[Cmicasa the Great]

also...

Quote

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. 

Why is that part.. particularly the bolded being ignored also? Negotiations and "carrot/stick" moves have to be put in place. Again.. I understand consolidation of underutilized plants.. and even merging a few vehicles. Personally I have never understood why the Spark and Sonic existed together.. In fact.. many times I went on record here saying that the TRAX should have simply been a TALL Sonic.. kill the Spark. The Volt too.. I could never understand why it simply wasn't called the CRUZE HYBRID.. sales would have been the same or better.. and the idea that having a separate vehicle similar to Toyota's Prius was unnecessary for GM.. they aren't using the VOLT name to make themselves seem more green.. so why bother? I see billion of marketing dollars going to the Silverado and its spawn.. and just thousands of dollars going to the Volt and Bolt.

[riviera74]

I could see three of those five plants shutting down sooner than later.  Does GM need Baltimore AND Warren?  In theory, GM could simply consolidate those two into one facility.  As for the other three, two can be shut down with no ill effects on GM's bottom line.  Sad as it is, This is not 1980 or even 2005.  Consolidation and efficiency are the orders of the day.  Wall Street Demands it and Commands it.  All other will follow.

[A Horse With No Name]

20 minutes ago, riviera74 said:

I could see three of those five plants shutting down sooner than later.  Does GM need Baltimore AND Warren?  In theory, GM could simply consolidate those two into one facility.  As for the other three, two can be shut down with no ill effects on GM's bottom line.  Sad as it is, This is not 1980 or even 2005.  Consolidation and efficiency are the orders of the day.  Wall Street Demands it and Commands it.  All other will follow.

Lordstown is hugely under utilized and has been for decades. 

[David]

Saw this at Jalopnik, good chart of the plants and people.

https://jalopnik.com/dead-the-cadillac-ct6-and-a-ton-of-other-gm-cars-1830656192 

[Robert Hall]

Wasn't the Camaro built at Oshawa also?  

[David]

4 minutes ago, Robert Hall said:

Wasn't the Camaro built at Oshawa also?  

Was, according to info on the web it was moved in 2012 to Lansing Grand River assembly plant.

https://en.wikipedia.org/wiki/Lansing_Grand_River_Assembly

They produce all the RWD cars there which is ATS, CTS and Camaro. So in the near future we will have CT3, CT5 and Camaro produced there.

[Drew Dowdell]

They put a load of money into Detroit-Hamtramck to make it one of the most advanced plants in North America.  I'm surprised they're closing it instead of moving other product there.   I get their reasoning for cutting the vehicles they're cutting, but why not build the inevitable CUVs/SUVs in that plant?

10 minutes ago, Robert Hall said:

Wasn't the Camaro built at Oshawa also?  

 

7 minutes ago, dfelt said:

Was, according to info on the web it was moved in 2012 to Lansing Grand River assembly plant.

It moved once Camaro moved to a platform shared with Cadillac..... in 2015, not 2012.

[William Maley]

5 minutes ago, Drew Dowdell said:

They put a load of money into Detroit-Hamtramck to make it one of the most advanced plants in North America.  I'm surprised they're closing it instead of moving other product there.   I get their reasoning for cutting the vehicles they're cutting, but why not build the inevitable CUVs/SUVs in that plant?

 

Because that would make too much sense. This is GM we are talking about.

[Drew Dowdell]

After simmering on this a bit more.... this is going to have serious political implications in 2020.  In the last 14 presidential elections, Ohio has gone with the ultimate winner in the election.  Trump won the county where Lordstown sits by 6,000 votes.  One would think it could also have a significant impact on the mood of the constituents of Michigan in 2 years time.   It is entirely possible that the next presidential election was just decided today. 

[Cmicasa the Great]

and again.. the article reads... "The plants up for possible closure are"

now according to Webster's... being what may be conceived, be done, or occur according to nature, custom, or manners

[Drew Dowdell]

6 minutes ago, Cmicasa the Great said:

and again.. the article reads... "The plants up for possible closure are"

now according to Webster's... being what may be conceived, be done, or occur according to nature, custom, or manners

What isn't changed is the vehicles that would be canceled.  Everything on the list is among GM's slowest retail sellers.  If they cancel the Cruze... there is no reason to keep Lordstown.   I am surprised but not really that the CT6 is on the cut list. The XTS we've known about for a while.... if Impala and XTS go, then there is no business case for Lacrosse.

From there it snowballs.  No Cruze = No Volt. 

No Volt + No Impala + No Lacrosse = CT6 alone at Hamtramck, which just doesn't add up.

My guess is that if ANY of these vehicles survive, it will be the CT6 because it is the newest, but they'll build it in China and ship it over. 

[Robert Hall]

It's weird they would have a plant making only one model.. seems like an inefficient use of resources.

[A Horse With No Name]

42 minutes ago, Drew Dowdell said:

After simmering on this a bit more.... this is going to have serious political implications in 2020.  In the last 14 presidential elections, Ohio has gone with the ultimate winner in the election.  Trump won the county where Lordstown sits by 6,000 votes.  One would think it could also have a significant impact on the mood of the constituents of Michigan in 2 years time.   It is entirely possible that the next presidential election was just decided today. 

One can hope.

[smk4565]

2 hours ago, Cmicasa the Great said:

I read this slightly different.. as I though the plan all along was to consolidate plants.. It makes zero sense to kill the Cruze, Volt, and CT6.. and still continue making the Spark and Sonic.. unless what is going on is these products are simply being moved. Product is shifting.. these non-enthusiastic drivers LOVE CUVs.. hence Ford's exodus from the car market.. but we have a CT3 and CT5 on the way.. the death of the XTS means without the CT6 after 2020... what's going to happen? MY guess.. on that note would be that someone got the message that if U are going to directly compete with the other lux brands.. it makes no sense to have a CT3, CT5, CT6.. and then intro a CT7. Could it be that the CT6, a vehicle that was misnamed in the first place.. will simply morph into a CT7 ?

I'm an optimist tho.. something that is not looked upon in high regard when it comes to GM

Ford and FCA dropped sedans mostly, I could see Chevy dropping the Cruze and just having an Asian built Sonic imported (depending on tariffs) for a cheap car and the Malibu being their only gas sedan.  If the Volt is an EV sedan you sort of have enough sedans.  

I think future GM is going to pick and choose where they compete and not go head on with luxury brands.  They may but Cadillac to 2 sedans, but I would be surprised if they didn't have a 3rd sedan.   We probably have to see how big the CT5 is, if it is larger than the CTS, and the CT4 is larger than a ATS, then you don't need a CT6 or CT7.  Anything outside of the S-class has horrible volume in that segment, the A8 exists because of China and the 7-series exists because of Europe.

[riviera74]

The CT6 and the Volt (maybe) are the only two that deserve saving.  The rest can rest in peace, given the massive shift to SUVs and crossovers. 

As for the Volt and Bolt, when is GM going to put out its replacement platform for those vehicles?  Moreover, where is the EV version of an Equinox/Terrain/Envision?