General Motors to close seven factories, axe 15% of workforce

27 November, 2018, 10:46 | Author: Mary Valdez
  • GM to Close 8 Plants, Lay Off Close to 15,000 Workers

Two other plants outside North America - as yet unnamed - are also due to close, in addition to the pre-announced shuttering of the firm's plant in the South Korean city of Gunsan. Shares of GM jumped almost 7 percent on the news, and closed the day up around 5 percent.

Lordstown Assembly in OH, shown here in 2008, is one of the plants at which General Motors plans to cut production in 2019. In Detroit, it plans to halt production of the Buick LaCrosse and Chevrolet Volt in March and the Cadillac CT6 and Chevrolet Impala in June.

It is also a response to a business cycle that has passed its peak and is now expected to show declining sales, said Kristin Dziczek, vice-president of industry, labour and economics at the Center for Automotive Research in MI.

CBS News reports that the layoffs make up about 15 percent of GM's workforce. The union that represents its Canadian workers said in a statement that GM's expected decision does not "live up to the spirit" of certain commitments the company made to union members during 2016 contract negotiations. It makes no sense to keep producing some vehicle models at a loss.

When GM ended production of the Chevy Cobalt at Lordstown, it had already announced that the plant would be retooled for the Cruze.

"Let me tell you folks in OH and in this area, don't sell your house", Trump said at the time, to wild applause "We're going to get those jobs coming back, and we're going to fill up those factories or rip them down and build brand-new ones".

Plants without products include assembly plants in Detroit; Lordstown, Ohio; and Oshawa, Ontario. The company last month offered voluntary buyouts for 18,000 salaried workers.

GM told the remaining workers at its sprawling plant in Lordstown on Monday that it is going to shut down all US production of the Chevy Cruze in March 2019.

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Further plants in White Marsh, Maryland, and Warren, Michigan will be "unallocated".

Trump won OH in 2016 campaigning on bringing manufacturing jobs back to America. It was about 50% cars just five years ago.

Both U.S. vehicle assembly plants scheduled to stop production next year now build slow-selling passenger cars.

But its outlook is bleak after GM announced production of the Chevy Cruze would stop in March, halting work at the assembly plant that already had lost two shifts and 3,000 union jobs since the beginning of a year ago.

Too many of GM's factories are operating on a single shift to build models that have fallen out of favor, leading its plants to run about 1 million vehicles short of their full capacity, said Kristin Dziczek, vice president of industry, labor and economics for the Center for Automotive Research in Ann Arbor, Michigan. Ford said in April it planned to stop building almost all cars in North America.

Lordstown, which has dropped from three shifts to one in recent years, exclusively produces the Chevrolet Cruze.

Even with the higher spending on electric and autonomous vehicles, GM plans to reduce overall annual capital spending to$7 billion by 2020 from an average of $8.5 billion a year during the 2017-2019 period.

While industry-wide passenger vehicle sales were down 13.2 percent through the first nine months of the year, pick-up truck and SUV sales rose 8.3 percent.

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