General Motors on Monday announced it will cut up to 14,000 workers in North America and put seven plants up for possible closure worldwide as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles.
The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. Here’s a breakdown of how General Motors got to this point:
What is driving this change, and why is General Motors taking these steps?
The restructuring reflects the changing U.S. and North American auto markets as manufacturers continue a dramatic shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. It was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors.
Five GM car plants are operating at 37 percent capacity, according to the Center for Automotive Research. Truck and SUV plants, on the other hand, operate nearly around the clock on three shifts and are at 105 percent of capacity. That's how GM can meet demand for trucks and SUVs while raising the possibility of closing car factories.
GM CEO Mary Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust.
But isn’t the economy on solid footing?
General Motors calls this a pre-emptive strike to get leaner before the next economic downturn. Barra told reporters the company is making the cuts “to get in front of it while the company is strong and while the economy is strong.”
Which plants could close?
The company has marked a sedan plant in Detroit, which makes the Buick LaCrosse, 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. Another two plants will close outside North America.
Which GM models will disappear and when?
GM will jettison the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year. The Chevy Volt plug-in hybrid will also be dropped along with the Chevy Cruze compact, which will be made in Mexico for other markets.
Are other automakers planning similar cuts?
GM isn't the first to abandon much of its car market. 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 car in the U.S. in the coming years. Ford has said it is restructuring and will lay off an unspecified number of white-collar workers. Toyota Motor Corp. also has discussed cutting costs, even though it's building a new assembly plant in Alabama.
What will happen to the workers?
The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off. At the factories, around 3,300 blue-collar workers could lose jobs in Canada and another 2,600 in the U.S., but some U.S. workers could transfer to truck or SUV factories that are increasing production.
Was the company’s decision affected by President Donald Trump’s tariffs, and what did the president have to say about this?
Barra said tariffs on imported aluminum and steel have hit the company, but she stopped short of saying they had anything to do with the restructuring. On Monday, President Trump said his administration and lawmakers are exerting “a lot of pressure” on GM. Trump said he told the company that the U.S. has done a lot for GM and that if its cars aren't selling, the company needs to produce ones that will.