GM Announces Massive Restructuring Plan, Will Close up to 5 Assembly Plants & Cut Thousands of Jobs

author: Xiaoli Tian   

DETROIT – General Motors has announced a massive restructuring plan, and will close up to five North American plants and lay off nearly 14,000 workers– roughly 15 percent of its global workforce.

General Motors says the decision announced on Monday was part of its comprehensive strategy first laid out in 2015. The move will help to strengthen GM's core business, capitalize on the future of personal mobility, including the development of self-driving cars and mobility services.

The automaker expects the moves to contribute $6 billion in cash savings by 2020 — $4.5 billion in cost reductions and $1.5 billion in lower capital expenditures.

"This industry is changing very rapidly," General Motors CEO Mary Barra told reporters on Monday. "We want to make sure we're well positioned, these are things we're doing to strengthen the core business."

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

Doubling Resources for EVs & Self Driving Cars

GM said it's is evolving its global product development workforce and processes to drive world-class levels of engineering in advanced technologies as wells as to improve quality and speed to market. GM said that resources allocated to electric and autonomous vehicle programs will double in the next two years.

GM has recently invested in newer, highly efficient vehicle architectures and will prioritize future vehicle investments in its next-generation battery-electric architectures. GM expects that more than 75 percent of GM's global sales volume will come from five vehicle architectures by early next decade.

GM cited changing customer preferences in the U.S., mainly the rapid decline of sedan sales as consumers opt for compact crossovers and SUVs. Therefore, GM's future products will be allocated to fewer plants next year.

GM has refocused capital and resources to support the growth of compact crossovers, which remain in high demand, along with larger SUVs and trucks. adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs.

Assembly plants that will be unallocated in 2019 include GM's Oshawa Assembly plant in Oshawa, Canada, the Detroit-Hamtramck Assembly plant in Detroit, as well as the company's Lordstown Assembly in Warren, Ohio.

The automaker on Monday said Oshawa Assembly in Canada, Lordstown Assembly in Ohio and Detroit-Hamtramck Assembly in Michigan will end production in 2019 and not be allocated any products. Not allocating product doesn't mean the plants will permanently close, but it puts their future and the jobs of roughly 6,700 hourly and salaried factory employees in the U.S. and Canada at risk.

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

GM says its transforming its global workforce to ensure it has the right skill sets for today and the future and will improve efficiency by reducing salaried and salaried contract staff by 15 percent, which includes eliminating 25 percent of its executive roles 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 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 announcement blindsided employees at GM's Oshawa plant in Canada. After the announcement, hundreds of workers walked off the job today. Canadian Prime Minister Justin Trudeau expressed "deep disappointment" over the closure of its Oshawa plant, catching governments and GM employees by surprise.

GM said the closure affects 2,973 assembly line jobs at the Oshawa plant, out of the automaker's Canadian workforce of 8,150.

Trudeau tweeted on Monday that he "spoke with GM's Chief Executive Mary Barra to express his deep disappointment in the closure." "We'll do everything we can to help the families affected by this news get back on their feet."

The Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala, Chevrolet Cruze and Chevrolet Volt are scheduled to stop being produced at the affected plants by the end of 2019.

Today's announcement comes after GM offered voluntary buyouts last month to 18,000 salaried employees in North America who have worked for the automaker for at least 12 years.

Xiaoli Tian