GM lays off 15% of salaried workers and halts production at five plants

[FaxModem1]

Washington Post

GM to lay off 15 percent of salaried workers, halt production at five plants in U.S. and Canada
WikiLeaks founder Julian Assange charged, court documents show
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By Taylor Telford November 26 at 12:16 PM
Amid global restructuring, General Motors announced Monday it would reduce its North American production and salaried and executive workforce.

The Detroit-based automaker said it would not be allocating any production to Oshawa Assembly in Ontario, Lordstown Assembly in Ohio and Detroit-Hamtramck Assembly in Michigan after December 2019. It will also stop allocating production at propulsion plants in White Marsh, Md., and Warren, Mich., after December 2019.

These changes are part of GM’s efforts to focus its resources on self-driving and electric vehicles, as well as more efficient trucks, crossovers and SUVs, the company said in a statement.

The company also said it will cut 15 percent of its salaried workforce, laying off 25 percent of its executives to “streamline decision-making.” GM also said it will close two plants outside North America by the end of 2019. Those locations have yet to be announced.


“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,” chief executive 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.”

Wall Street applauded the news, with GM’s stock climbing more than 7 percent following the announcement.

The company said it expects to save $6 billion in cash as a part of the restructuring. The cost-cutting is crucial to GM’s aggressive strategy with efficient and electric vehicles said Michelle Krebs, an analyst with AutoTrader.

“GM is making a big bet on a future that is autonomous, connected and electric,” Krebs said. “It has to be extremely profitable now to finance that because no one knows when those vehicles will be commonplace.”


Ohio Sens. Rob Portman (R) and Sherrod Brown (D), however, both slammed GM’s decision to shut down the Lordstown plant, shaming the company for poor treatment of its workers.

“GM owes the community answers on how the rest of the supply chain will be impacted & what consequences its disastrous decision will have,” Brown tweeted Monday.

Congressman Tim Ryan, who represents Lordstown as part of Ohio’s 13th District, also blamed President Trump for the job losses, pointing out that Trump had promised workers in the region that jobs were “all coming back” when he visited last year.

“The Valley has been yearning for the Trump Administration to come here, roll up their sleeves and help us fight for this recovery,” Ryan said in a statement Monday. “What we’ve gotten instead are broken promises and petty tweets. Corporations like General Motors and the President himself are the only ones benefiting from this economy.”

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GM has been searching for ways to cut costs, as it has suffered sliding sales in recent years in two of its most crucial markets: China and the United States. In October, it offered buyouts to 18,000 employees, Dow Jones reported. Last year showed signs of the first sustained slowdown since the global financial crisis, with U.S. auto sales falling about one percent in 2017, according to Kelley Blue Book. Continued declines of new car purchases have troubled auto companies, especially as they grapple with technology that may reshape the industry and brace for the impact of the Trump administration’s trade dispute.

When President Trump announced tariffs last summer, Detroit’s Big Three automakers — GM, Ford and Fiat Chrysler — all trimmed their profit forecasts for the rest of the year, citing the rising commodity costs that would lead to hikes in prices and manufacturing costs. GM took a hard stance, warning of the fallout within the auto industry and saying that the tariffs risked “undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs” in comments filed with the Commerce Department in June.

GM was one of a few large U.S. companies that didn’t immediately benefit from last year’s tax cut law because that company had stockpiled “deferred tax assets” from its rocky performance in the lead up to the financial crisis 10 years ago. Those deferred tax assets allowed GM to already pay a low tax bill each year, but the new law made those deferred tax assets less valuable. Still, GM’s top executives had said the company expected to benefit from the new tax law in the future, though some analysts had estimated it could take several years.


Rumors of the plant closure spread when Canadian union Unifor said in a statement Sunday night that the group had learned that there would be no product scheduled for the Oshawa Assembly Plant, which is the headquarters of GM Canada, past December 2019. The plant has been open for 65 years and employs about 2,500 people.

“Based on commitments made during 2016 contract negotiations, Unifor does not accept this announcement and is immediately calling on GM to live up to the spirit of that agreement,” Unifor said in the statement.

Uncertainty loomed ahead of the official announcement, with workers walking off the job in protest, CTV News reported.

"There’s people in there bawling their eyes out. We can’t get any answers,” one man told CTV News.

GM did not specify whether hourly workers at the five plants would be affected.

Not sure if this is technology, Trumponomics, or some other factor, but whatever the case, it's bad news for the people at GM.

[U.P. Cinnabar]

It's shit management endemic to GM.

[Tribble]

Maybe the CEO should fly to Washington via private jet again to ask for another bailout.

[Broomstick]

So, now the executives are getting the ax, too?

Not content with gutting the blue collar and middle classes let's starting hollowing out the lowest tier of the upper. On the radio today they were talking about 14,000 people out work - compared to the whole of North America that's a drop in the bucket, but I still find it ominous. I wonder if this is the start of a new economic plunge, like 2008?

[aerius]

I wonder if this is the start of a new economic plunge, like 2008?

Not exactly a start, more like a continuation of 2008. We managed to paper over the cracks and pretend that everything is fine for almost 10 years, but none of the underlying problems with the economy were ever fixed. In fact, many of them are actually worse. When this shit blows up, we're gonna find out what living in a real depression is like.

Getting back on topic, it's not unexpected at all. Car sales are down and every automaker has been reducing their model lineup & production, with Ford going so far as to kill all but 2 of their car models (Mustang and Focus). GM is going down the same path as is Fiat-Chrysler. Thanks to market trends plus fuel economy & emissions standards, it makes far more financial sense to make trucks & SUVs than cars.

[FaxModem1]

If this is the new plunge, how will we be able to see the pattern, and not just business being business?

[Aether]

I wonder if this is the start of a new economic plunge, like 2008?

Not exactly a start, more like a continuation of 2008. We managed to paper over the cracks and pretend that everything is fine for almost 10 years, but none of the underlying problems with the economy were ever fixed. In fact, many of them are actually worse. When this shit blows up, we're gonna find out what living in a real depression is like.

Citation, please. A correction is not a "blow up" no is the typical uncertainty due to non-rational actors. Trump is rocking the boat, but that is not a definite path to a depression.

Getting back on topic, it's not unexpected at all. Car sales are down and every automaker has been reducing their model lineup & production, with Ford going so far as to kill all but 2 of their car models (Mustang and Focus). GM is going down the same path as is Fiat-Chrysler. Thanks to market trends plus fuel economy & emissions standards, it makes far more financial sense to make trucks & SUVs than cars.

Good news for me. Give me the 700+ HP Mustang or 797 HP Hellcat Redeye (a.k.a. Land Barge) with smiles per gallon since the rest of the fleet will have Ford (and others) meet CAFE standards.

[Sea Skimmer]

GM still makes too many different products that cannibalize themselves for the market segments they actually target. Further cuts are absurdly overdue, it's amazing GM has held it off this long, but GM historically has been pretty good at using the same parts on different vehicles which is the only reason they've been able to support such a wide product line for so long. It's also a big part of why people ever buy them, they break but they are cheap to fix too, usually, compared to other brands. The shift towards hybrids and electric cars makesthis lot harder to do that, you might be able to use the same battery cells on different vehicles but that's about the limit, even the overall battery package has to be different to work well. This is going to seriously affect GM in the near future.

It's also just a reality that GM was kept alive so long even before 2008 in no small part by sales in China, where the vehicles it sells tend to be at the higher end of the economy range then in the US with resulting higher profit margins. And since that market is being hit very directly by Trump's trade war it's probably helped push GM in further rationalization.

[Broomstick]

All true, yet we are still going to have 14,000 people unemployed and looking for new work, and that will seriously impact the towns i which they live.

[Solauren]

And that is not accounting for feeder plants that will hit in a ripple effect.

[Zaune]

All true, yet we are still going to have 14,000 people unemployed and looking for new work, and that will seriously impact the towns i which they live.

And that is not accounting for feeder plants that will hit in a ripple effect.

All is not lost, however. Reliable rumour, via a guy I know in the same union as the laid off workers, has it that someone wants to redevelop the closed auto plant as... wait for it... a shopping mall!

I say reliable rumour because you couldn't make this shit up.

[Broomstick]

Right.... and IF a worker gets a job at said shopping mall... which will take years to build... it will probably pay 1/3 or less of their prior wage with fewer or no benefits. Meanwhile it will be food stamps and struggling to keep a roof overhead

[K. A. Pital]

Mall workers are some of the lowest-paid members of the worker class.

The way they are treated - even in "civilized countries" - borders on inhumanity and cruelty (thinking of the "toilet-controlling building planning to maximise workforce presence on the shop floors").

More and more will join the ranks of the downtrodden.

[Solauren]

And that is not accounting for feeder plants that will hit in a ripple effect.

All is not lost, however. Reliable rumour, via a guy I know in the same union as the laid off workers, has it that someone wants to redevelop the closed auto plant as... wait for it... a shopping mall!

I say reliable rumour because you couldn't make this shit up.

As much as I defend Oshawa (living there and all that). The area of Oshawa that the 'South Plant' is in, is completely unsuitable for a Mall. The area has had no growth in decades, and is generally considered the worse part of the city after the area around the 'Meth Clinic.

Quite frankly, the only thing it would be good for is a new factory, garbage dump, or if you can clean up the surrounding area, new housing.

[Tribble]

And that is not accounting for feeder plants that will hit in a ripple effect.

All is not lost, however. Reliable rumour, via a guy I know in the same union as the laid off workers, has it that someone wants to redevelop the closed auto plant as... wait for it... a shopping mall!

I say reliable rumour because you couldn't make this shit up.

As much as I defend Oshawa (living there and all that). The area of Oshawa that the 'South Plant' is in, is completely unsuitable for a Mall. The area has had no growth in decades, and is generally considered the worse part of the city after the area around the 'Meth Clinic.

Quite frankly, the only thing it would be good for is a new factory, garbage dump, or if you can clean up the surrounding area, new housing.

Maybe that's where they can relocate Five Points Mall

But seriously, the writing has been on the wall for the Oshawa GM plant for a long time now. Even though GM is making enough profit to do corporate buybacks of stocks, why would they want a plant in Canada when there are cheaper places elsewhere?

[Solauren]

Dude, Five Points has been dead since Zellers became Target, and then Target fucked up nationally. That, and it's been bulldozed to turn into storage lockers. (And most of those stores moved to the Walmart Plaza on Taunton, King Street/Harmony, and the OC anyway...)

Having worked at GM, however, I can agree. I was called in to do overtime after Axis bought the North end Plant. Spent 3/4 of my time sitting on my ass. Dad told me that was typical of weekend overtime at either plant except for the first few months a new year's model came out. (He worked in the RIM lab after having worked on the line for years)

[mr friendly guy]

https://www.wsj.com/articles/why-gm-isn ... 1543320164

SHANGHAI—President Trump says he wants General Motors Co. GM -0.51% to stop building cars in China, its biggest market. That would make GM—already plagued by weak sales in the U.S.—vulnerable to setbacks in China too.

In today’s globalized car industry, auto makers need their factories to be close to their customers if they’re to turn a profit, a calculation that is being reinforced by the tit-for-tat tariffs China and the U.S. have imposed on each other’s exports, analysts say.

“Even if this tariff was zero, GM still wouldn’t build its China volumes in the U.S.,” said Robin Zhu, a senior analyst at Sanford C. Bernstein. “The supply chain would be too long, and logistics costs would make the cars structurally unprofitable.”

China’s tariffs on U.S.-built vehicles have hurt Tesla most of all, but they have also affected BMW AG , Daimler AG and Ford Motor Co.

Last month, Tesla said it was accelerating plans to build a plant in Shanghai, which will likely start producing vehicles around 2020-21, in response to the dispute between Beijing and Washington. It ultimately aims to make 500,000 cars a year in China, emulating GM and others in building vehicles locally to capitalize fully on Chinese demand.

The whimsical imposition of tariffs means no auto maker is likely to want to use the U.S. as an export base in the future —Janet Lewis, Macquarie Group
Higher tariffs are convincing auto makers to build more, not less, overseas, said Janet Lewis, head of industrials and transportation in Asia at Macquarie Group .

“Given GM’s customers are in China, it would make no economic sense to export from the U.S. to China,” Ms. Lewis said.

Basically what I suspected for a while now. GM sells more cars in China than it does in the US. It makes more sense for them to build the cars Chinese want to buy in China rather than the US, an tariffs have just worsened it. The article goes on to mention that Chinese have decrease their tariffs from 25% to 15% on automobile in July, but then increased it for US manufacturers to 40% due to the trade war.

It looks like America is now tired of winning.

[Tribble]

Dude, Five Points has been dead since Zellers became Target, and then Target fucked up nationally. That, and it's been bulldozed to turn into storage lockers. (And most of those stores moved to the Walmart Plaza on Taunton, King Street/Harmony, and the OC anyway...)

So that would explain why it appeared to be missing the last time I drove by.

It's kinda sad really, as I used to shop there a lot… alas, I suppose as storage lockers it'll still be more useful than the GM plant after it closes

[Solauren]

Dude, Five Points has been dead since Zellers became Target, and then Target fucked up nationally. That, and it's been bulldozed to turn into storage lockers. (And most of those stores moved to the Walmart Plaza on Taunton, King Street/Harmony, and the OC anyway...)

So that would explain why it appeared to be missing the last time I drove by.

It's kinda sad really, as I used to shop there a lot… alas, I suppose as storage lockers it'll still be more useful than the GM plant after it closes

Also, it needs alot less clean up then the South plant's grounds will need. I wasn't kidding about using it as a garbage dump. Then you think it took several years to clean up the old North plant before the Costco went in, well, that was roughly 1/10th the size...