GM Plans More Than 14,000 Job Cuts, 7 Factory Closings (Lindaparton/Dreamstime)
Monday, 26 November 2018 01:21 PM
General Motors Co. will cut more than 14,000 salaried staff and factory workers and close seven factories worldwide by the end of next year, part of a sweeping realignment to prepare for a future of electric and self-driving vehicles.
Four factories in the U.S. 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. Another two will close outside North America. The Detroit-based company’s shares surged on the plan, which includes abandoning some of its slower-selling sedan models.
The planned job reductions, which triggered political pushback in the Midwest U.S. and Canada, come on the heels of surprisingly strong third-quarter earnings. GM Chief Executive Officer Mary Barra is trying to make the company leaner as U.S. auto demand slides from a record in 2016 and sales in China -- GM’s other profit center -- 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.”
GM stock (GM) jumped as much as 7.9 percent to $38.75, the highest since July, as of 12:20 p.m. in New York trading. The stock is still down about 7 percent this year.
The plan to lop 15 percent 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 $6 billion by the end of 2020 and result in one-time charges of up to $3.8 billion in the fourth quarter of this year and first quarter of 2019.
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