GM to slash 14,700 jobs, considering closing 5 plants

Michigan

DETROIT (AP/WOOD) — General Motors will lay off up to 14,000 factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles.

The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Some U.S. factory workers could transfer to truck or SUV factories that are increasing production.

Most of the affected factories build cars that won’t be sold in the U.S. after next year, including the Chevrolet Volt rechargeable gas-electric hybrid. They could close or they could get different vehicles to build. Their futures will be part of contract talks with the United Auto Workers union next year.

The salaried reductions amount to 15 percent of GM’s North American white-collar workforce of 54,000. At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the U.S.

GM, the largest automaker in the U.S., which sells the Chevrolet, Buick, Cadillac and GMC brands, said the moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.

Those cuts are in addition to $6.5 billion that the company has announced by the end of this year.

GM doesn’t foresee an economic downturn and is making the cuts “to get in front of it while the company is strong and while the economy is strong,” CEO Mary Barra told reporters.

IMPACT ON WEST MICHIGAN SUPPLIERS?

Many companies that make supplies for GM are in West Michigan, including Gentex in Zeeland, which makes vehicle mirrors, and LG Chem in Holland, which makes batteries for electric vehicles including the Volt.

While GM’s decision will have a big impact in the Detroit area, IHS automotive industry analyst Mike Wall told 24 Hour News 8 the impact on this side of the state won’t be nearly as significant.

“I can’t say that there aren’t any suppliers that are going to feel a negative staffing impact on this. I don’t know for sure,” Wall said. “But at the same time, because so many suppliers are building parts for a wide variety of vehicles, there’s a little more flexibility in there.”

Based on his talks with suppliers, Wall added that things are generally going well now because auto sales, despite GM’s decision, are still solid.

It’s just a matter of responding to which vehicles are being sold most and right now, that’s not sedans.

“A lot of cases, these suppliers have been kind of seeing the writing on the wall,” Wall said. “They’ve seen certain (car) volumes decline rather significantly over the past few years. This probably isn’t going to come as a huge shock to a lot of suppliers in the area.”

24 Hour News 8 reached out LG Chem to see if and how GM’s move might impact it and received this statement:

“While we can’t comment specifically on future product plans, we’re very confident in the future of electric vehicles, and we remain very upbeat about the business here at LGCMI.”

24 Hour News 8 also reached out to Gentex, but had not heard back as of Monday evening.

—24 Hour News 8’s Evan Dean

GM’S STRATEGY

CEO Barra said GM is still hiring people with expertise in software and electric and autonomous vehicles. Many of those who will lose jobs are now working on conventional cars with internal combustion engines.

Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust with it. 

The company, she said, has invested in newer architectures for trucks and SUVs so it can cut capital spending while still raising investment in autonomous and electric vehicles.

GM has offered buyouts to 18,000 retirement-eligible workers with a dozen or more years of service. It would not say how many have accepted the buyouts, but it was short of the company’s target because GM said there will be white-collar layoffs. 

The company expects to take a pretax charge of $3 billion to $3.8 billion due to the actions, including up to $1.8 billion of asset write downs and pension charges. The charges will take place in the fourth quarter of 2018 and the first quarter of next year.

The factories up for closure are part of GM’s effort “to right-size our capacity for the realities of the marketplace,” as consumers shift away from cars to trucks and SUVs, Barra said.

Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars. LaCrosse and Volt production will end March 1, while CT6 and Impala production would stop June 1.

The plant in Lordstown, Ohio, which makes the Chevrolet Cruze compact car also is on the list, and Barra said the Cruze would no longer be sold in the U.S. Production would stop March 1.

Work on six-speed transmissions made at the Warren, Michigan, transmission plant would stop Aug. 1, while the Baltimore transmission plant would stop production April 1, GM said.

Meanwhile, GM’s plant in Oshawa, Ontario, will stop making the Impala, Cadillac XTS and 2018 full-size pickups in the fourth quarter of next year.

Barra said tariffs on imported aluminum and steel have hit the company, but she stopped short of saying they had anything to do with the restructuring.

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This story has been corrected to show that up to 14,000 workers could lose jobs instead of 14,700. Gillies reported from Toronto. 24 Hour News 8’s Evan Dean reported from metro Grand Rapids.

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