General Motors to cut 10,000 jobs, targets 5 factories for closing next year

US President Donald Trump and Canadian Prime Minister Justin Trudeau both expressed dissatisfaction with General Motors' plan to layoff 14,000 workers and close five plants across North America.
The General Motors assembly plant in Oshawa, Ontario, Canada, on Nov 26, 2018.
The General Motors assembly plant in Oshawa, Ontario, Canada, on Nov 26, 2018. PHOTO: REUTERS

SOUTHFIELD, MICHIGAN (BLOOMBERG) - General Motors said it will cut more than 10,000 salaried staff and factory workers and close five factories by the end of next year, part of a sweeping realignment as it prepares for a future with a greater number of purely electric vehicles.

Four factories in the US and one in Canada could be shuttered by the end of 2019 if the automaker and its unions don't come up with an agreement to allocate more work at those facilities, GM said in a statement today.

Along with the closures, the company is jettisoning some of its slower-selling sedans.

The cuts come on the heels of surprisingly strong third-quarter earnings.

GM chief executive Mary Barra is trying to make the company leaner as US auto sales slide from their 2016 record year and sales in China - GM's other profit centre - are also in a slump.

Barra is also shifting resources toward building electric cars and, eventually, vehicles that drive themselves.

"We're taking these actions while the economy is strong," Barra told reporters in Detroit. "This industry is changing very rapidly. We want to make sure we're well-positioned. We think it's appropriate to do it while company is strong and the economy is strong."


The Detroit-based company’s shares surged. GM jumped as much as 7.9 per cent to US$38.75, the highest since July, as of 11.16am in New York trading. The stock is still down about 7 per cent this year.

The plan to cut 15 per cent of salaried workers follows a round of buyouts that GM offered to about a quarter of its longer-tenured workforce at the end of October.

GM said the cuts will boost automotive free cash flow by US$6 billion by the end of 2020 and result in one-time charges of up to US$3.8 billion in the fourth quarter of this year and first quarter of 2019.

GM also said that the company will cut the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year. The Chevy Volt plug-in hybrid will also be cut along with the Chevy Cruze compact, which will be made in Mexico for other markets.

The likely shutdowns have already opened up GM to political pushback, with Canada’s Prime Minister Justin Trudeau tweeting that he has expressed “deep disappointment” with Barra directly.

The US plants are in places that have been economically devastated by job losses and pressure on wages for decades, which helped lead to the 2016 election of Donald Trump as US president.

US Senator Rob Portman, a Republican from Ohio, said he’s “deeply frustrated” with GM’s decision to shut down a plant in Lordstown and is pressing Barra to come up with an alternative product for the factory.


Barra is cutting staff from operations that make conventional cars and hiring people who can design electric cars or add software prowess to GM Cruise LLC, the automaker's autonomous vehicle unit in San Francisco.

That means GM needs to allocate more resources to purely electric cars, unlike the hybrid Volt, and to autonomous technology, Barra said.

GM is cutting more than 6,000 hourly and salaried workers at its plants and 15 per cent of the salaried workers in North America for a total of more than 10,000.

The company has marked a sedan plant in Detroit, a compact car plant in Ohio, and another assembly plant outside Toronto for possible closure. Also at risk are two transmission plants, one outside Detroit and another in Baltimore.

While GM is buying out and laying off workers in its core auto operations, the automaker has added close to 1,000 people in the past year at Cruise.