Home News GM Cutting More Than 14,000 Jobs, Halts Production At Several Plants

GM Cutting More Than 14,000 Jobs, Halts Production At Several Plants

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General Motors announced Monday that the company will lay off more than 14,000 workers and will shut down some plants in Canada and the U.S. as it undergoes a restructuring that will cost up to about $3.8 billion. In response to this, the United Auto Workers claimed that it would utilize all available legal, contractual, as well as collective bargaining avenues to counter such actions.

The automaker’s decision gets criticism from both U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau.

Trump told reporters who were at the White House on Monday afternoon that he was not happy, alluding to GM’s CEO, Mary Barra. According to him, the United States saved General Motors, and taking the company out of Ohio is not good. He also thinks that Barra will have to put something back in eventually.

As for Canada’s Prime Minister, Trudeau released a statement through Twitter expressing his support for all the workers at Oshawa Car Assembly Plant, located in Ontario. He mentioned that he recently spoke with Mary Barra as he wanted to express his deep disappointment regarding the closure.

GM said that its three assembly plants, Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly in Michigan, as well as Oshawa Assembly in Ontario, Canada would be “unallocated” next year. The company also plans to wind down operations at its propulsion plants located in Warren, Michigan, as well as in White Marsh, Maryland.

While such decision effectively closes down these plants, the automaker would not directly say that they are shutting them down. GM spokeswoman, Stephanie Rice, stated in an email that closing down a plant is a matter of negotiation with the UAW. She also said that the company is announcing the discontinuance of certain products resulting in some plants being without allocated volume to produce.

General Motors expects to cut 15% of its salaried employees, which results in a 25% reduction to those who have executive ranks, according to the company.  The job cuts include about 14,000 jobs in total, with about 8,100 white-collar workers and more than 6,000 factory jobs, as stated by the automaker.

As of December 31, General Motors hired 180,000 people. Out of this number, 77,000 were paid based on a regulatory filing. There are about 51,000 employees that were represented by labor unions, which includes the UAW.

Terry Dittes, UAW vice president who leads negotiations with the automaker, said that the tough decision made by GM to cut or close down certain North American plants, despite opening or increasing its production in plants located in other areas like Mexico and China for sales to American consumers causes profound damage to the American workforce.

The company said that the reorganization would allow them to save an estimated amount of $6 billion per year by yearend 2020. Back in October, GM tried to thin its ranks through buyouts. Approximately 18,000 eligible employees received such an offer.

According to GM’s former vice chairman, Bob Lutz, the auto giant historically would have implemented sales incentives to try selling more cars before resorting to shutting down several plants.

During CNBC’s “Halftime Report,” Lutz said that General Motors would now look at the hard reality. These days, there is a demand problem with cars and the company opted to shut down certain facilities and move production to truck plants.

The company significantly invested in SUVs, trucks, as well as crossovers since the consumer demand already shifted from the traditional type of passenger cars. It is a move mirrored by decisions made by certain car companies like Fiat-Chrysler and Ford. The latter previously expressed its plans to cut down its salaried workforce.

Sam Huszczo, the owner of SGH Wealth Management located outside of Detroit, said that a lot of his financial planning clients at General Motors mentioned to him that there are about 4,000 employees who receive average salaries of approximately $120,000 already accepted buyouts that were presented to them last month.

Before the company’s announcement, trading in GM stopped momentarily. Its shares soared to about 7.8% in intraday trading before it finally settled to close at $37.65 per share, an increase of 4.8% for the day.