Published: Tue, November 27, 2018
Finance | By Jaime Brady

GM to close plants in Canada, Ohio, Maryland and MI

GM to close plants in Canada, Ohio, Maryland and MI

In October, nearly 65 percent of new vehicles sold in the USA were trucks or SUVs.

Fiat Chrysler Automobiles got out of small and midsize cars two years ago, while Ford announced plans to shed all cars but the Mustang sports vehicle in the USA in the coming years. But investors obviously like what they see so far: the company moving to cut its labor costs to brace for lower auto sales, even if it means putting thousands of workers on the unemployment line.

General Motors announced Monday that it plans to lay off roughly 14,700 workers, a number which represents 15 percent of all its salaried employees.

Toyota also has discussed cutting costs, even though it is building a new assembly plant in Alabama.

It also exited the European market in 2017 by selling its Opel-Vauxhall division to Peugeot; ceased manufacturing of vehicles in Australia; and has been aggressively investing in autonomous vehicles through its Cruise division - through which it intends to launch 20 new electrified vehicles by 2023.

Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed United States vehicle production.

Barra on Monday portrayed the decision to put five North American factories on notice for potential closure and cut almost 15,000 jobs as necessary to keep the company strong as it plows money into new technology and new businesses such as robo-taxi services.

The company also said it will stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.

The company estimates that the cuts will save it $6 billion by the end of 2020.

The salaried reductions amount to 15 percent of GM's North American white-collar workforce of 54,000.

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Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust with it. Canada and Ontario also backed a 2005 investment by GM to modernize the Oshawa plant's paint shop. GM, in October, said it would offer buyouts to about 18,000 salaried employees.

If nothing else, losing $1 billion to higher import taxes may have forced GM to take more dramatic steps more quickly than otherwise would have.

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

Four factories in the USA 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 to those facilities, GM said in a statement Monday.

The Oshawa plant closure in 2019 will throw more than 2,500 people out of work and end a century-long connection between GM and the city east of Toronto.

Jerry Dias, president of Unifor, the Canadian labour union, said he "will vigorously fight again to maintain these good-paying auto jobs". "And in return, GM has turned its back on us when we need them the most".

The Lordstown plant became a target in the restructuring as its lone product, the Chevy Cruze sedan variant, has faced drastically plummeting sales over the last calendar year.

Plants without products include assembly plants in Detroit; Lordstown, Ohio; and Oshawa, Ontario.

Still, several Twitterians suggested that GM was not the only one to be blamed and noted that the government could do more to save the plant.

GM shares rose as much as 7.8 percent following the announcement, and were almost 6 percent higher at $37.97 in midafternoon trading.

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