Published: Wed, November 28, 2018
Money | By Wilma Wheeler

Some businesses could feel impact of GM cuts

Some businesses could feel impact of GM cuts

General Motors announced today that it plans to close five North American plants and cut 15 percent of its salaried workforce in response to market changes.

Most of the affected GM factories, including those in Baltimore County, Maryland; Warren, Michigan; and Oshawa, Ontario - build cars that won't be sold in the US after next year, including the Chevrolet Volt rechargeable gas-electric hybrid. Those include a factory in Lordstown, Ohio, where GM makes the Cruze; the Detroit-Hamtramck plant in the company's hometown, where it makes the Volt and several large sedans; and a factory in Oshawa, Ontario, where such models as the Impala, the Cadillac XTS, the Chevy Silverado and the GMC Sierra pickup are made.

The salaried work force restructuring includes cutting 15 percent of its 54,000 salaried employees in North America - more than 8,000 including cutting global executives by 25 percent. The company has sold about 22,000 through September and in August sought an exclusion from 25 percent US tariffs imposed on Chinese vehicle imports.

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 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. It's making money on trucks and SUVs.

"It's like we're in a limbo now", said Marsh, a single mother who said she has a teaching degree to fall back on if the plant is closed.

General Motors workers leave the Oshawa General Motors plant in Oshawa, Ontario, on Monday. In October, nearly 65 percent of new vehicles sold in the US were trucks or SUVs. He won the county by about 6 percentage points, four years after then-President Barack Obama had won it by 23 points.

The United Automobile Workers (UAW) union vowed to "confront this decision by GM through every legal, contractual and collective bargaining avenue open to our membership".

OH lawmakers urged GM to reconsider.

GM will also prioritize electric auto development and concentrate on five models that account for three-quarters of the automaker's sales.

Steve Rattner, the head of former President Obama's auto task force who oversaw the GM and Chrysler bailouts, said the announcement shouldn't be construed as a violation of the bailout agreement because the industry has changed and the companies need to be able to adapt.

As recently as 2012, passenger cars made up more than 50 percent of all U.S. new vehicle sales.

Brown and Ryan also pointed out that taxpayers bailed out the automaker a decade ago and have expressed frustration during past months over their attempts to talk with GM CEO Mary Barra about how to keep the plant running.

GM has offered buyouts to 18,000 retirement-eligible workers with a dozen or more years of service.

At a rally near the plant a year ago, Trump talked about passing by big factories whose jobs "have left OH", then told people not to sell their homes because the jobs are "coming back".

However, many factors are at play for GM.

Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans.

Was the company's decision affected by President Donald Trump's tariffs, and what did the president have to say about this?

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