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article imageGeneral Motors says cutting 15% of workforce to save $6 bn

By Heather SCOTT (AFP)     Nov 26, 2018 in World

In a massive restructuring, US auto giant General Motors announced Monday it will cut 15 percent of its workforce to save $6 billion and adapt to "changing market conditions."

The moves include shuttering seven plants worldwide as the company responds to changing customer preferences and focuses on popular trucks and SUVs and increasingly on electric models.

The closures drew immediate criticism from the US labor union representing workers, which accused the company of shifting production overseas at the expense of American workers.

That would be a blow to President Donald Trump, whose harsh and confrontational trade policies included a renegotiation of the North American Free Trade Agreement specifically designed to favor the US auto industry and protect jobs.

Instead, GM will shutter three North American auto assembly plants next year: the Oshawa plant in Ontario, Canada; Hamtramck in Detroit, Michigan and Lordstown in Warren, Ohio.

In addition, it will close two propulsion plants -- which produce batteries and transmissions -- in Baltimore, Maryland and Warren, Michigan, as well two unidentified plants outside of North America. GM already had announced plans to cease operations at its Gunsan, Korea plant.

"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," GM CEO Mary Barra said in a statement.

"We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success."

- 'Deep disappointment' -

The job cuts from the current 180,000 GM workforce will included a 25 percent reduction in executive-level employees to "streamline decision making."

According to reports, the five North American plants employ nearly 7,000, including 3,000 workers in Ontario.

Canada's Prime Minister Justin Trudeau expressed his 'deep disappointment' in the clo...
Canada's Prime Minister Justin Trudeau expressed his 'deep disappointment' in the closure, but pledged to help the 3,000 workers impacted in Ontario
Lars Hagberg, AFP

Trading in GM shares was halted just before the announcement. Once it restarted 20 minutes later, prices jumped and continued rising, showing a gain of more than six percent to $37.99 around 1700 GMT.

Analysts were generally upbeat about the news.

"In contrast to times past, General Motors, under CEO Mary Barra, is trying to get ahead of a potential crisis by making cuts now," Michelle Krebs of Autotrader said in a client note.

While GM has been increasing its focus on highly popular trucks and SUVs, the company said in a statement it would also prioritize investment in "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."

In an investor call, Barra said some GM cars would no longer be available in North America.

"We're evaluating the Chevrolet Cruze for other markets but none would be shipped to the US," she said.

The restructuring follows a similar move by Ford to cut down on the number of models it manufactures but will face opposition from workers.

The UAW, the US autoworkers union, blasted GM's decision and said it "will not go unchallenged."

"The UAW and our members will confront this decision by GM through every legal, contractual and collective bargaining avenue open to our membership," the union said in a statement.

"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," said Terry Dittes, UAW vice president.

Dittes called the production decisions "a slap in the face" given employee concessions during the economic downturn and a taxpayer bailout from bankruptcy.

UAW President Gary Jones accused GM 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."

Workers at the Ontario plant staged a wildcat strike on Monday to protest the closure. Canada's Unifor labor union is due to hold a news conference later Monday.

Canadian Prime Minister Justin Trudeau said he had spoken to Barra on Sunday to express his "deep disappointment in the closure."

"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," Trudeau said on Twitter.

Barra in the statement said the actions "will increase the long-term profit and cash generation potential of the company and improve resilience."

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