GM Chevy Cruze, built at Lordstown, OH: (Sales -27% through September 2018). GM Chevy Impala, built at Oshawa, Canada and Hamtramck Michigan: (sales -13%). GM Buick LaCrosse (-14%); and Cadillac CT6 (sales -11%) both built at Hamtramck Michigan.
Following major drops in the sedan sector of the U.S. automotive market, General Motors CEO Mary Barra announced plans to halt production next year at three assembly plants: Lordstown, Ohio; Hamtramck, Michigan; and Oshawa, Ontario. GM will fully stop production on several models assembled at those plants: Chevrolet Cruze, Cadillac CT6 and the Buick LaCrosse.
These cuts could lead to approximately 6,000 to 8,000 lost jobs.
DETROIT/WASHINGTON (Reuters) – General Motors Co said on Monday it will cut production of slow-selling models and slash its North American workforce in the face of a declining market for traditional gas-powered sedans, shifting more investment to electric and autonomous vehicles.
[…] GM’s North American salaried workforce, including engineers and executives, will shrink by 15 percent, or about 8,000 jobs. The company said it will cut executive ranks by 25 per cent to “streamline decision making.”
Even as GM is moving to lay off salaried staff, the company is hiring. At GM’s Detroit headquarters on Monday, there were signs directing people to a “new hire orientation” meeting.
Unlike Japanese automakers Nissan Motor Co Ltd, Honda Motor Co Ltd and Toyota Motor Corp, which rely on a more flexible system where they make multiple vehicles at a single plant, GM has too many factories that make just a single model.
With U.S. car sales lagging, that means several GM car plants have fallen to just one shift, including its Hamtramck and Lordstown assembly plants.
[…] Unlike its plants making passenger cars, many of GM’s plants producing its higher-margin trucks and SUVs are running on three shifts, with some running six and sometimes seven days a week to keep up with demand. (read more)
The GM, old school, single-line production issue process is part of the problem. There is a built in risk of functional obsolescence within the business model if a product is no longer selling or favorable to the market. Hence, Barra’s decision is a market driven outcome.
However, the counter argument from UAW and the White House would be to retool the facilities for products that are consumer-centric with higher demand. Example: GM is currently building Buick SUV’s in China that could easily be built in the U.S. Hence, Mrs. Barra has been requested to meet with Economic Council Chairman Larry Kudlow.
Within this type of issue, a new political dynamic emerges where President Trump’s policy, perspective and political views are more in line with traditional democrats than corporate republicans.
Businessman Donald Trump is not adverse to labor unions and has a long history of getting along well with union heads and membership on his projects. As President, Mr Trump understands the blue-collar economic dynamic and favors all larger policies that benefit the U.S. worker; not necessarily the corporation. Within this dynamic the MAGA coalition is an assembly of middle-class democrats and middle-class republicans.
It will be interesting to see where GM goes with this. No doubt President Trump will not be happy at the possibility of any job losses and will work to find a win/win that keeps those jobs; even if it means pressuring GM with the threat of tariffs on their Chinese products…