GM to close Canadian plant, but that's just the beginning

Adjust Comment Print

The restructuring reflects the changing USA and North American auto markets as a dramatic shift away from cars toward SUVs and trucks continues.

America's biggest auto maker said the move was in response to changing customer tastes, with SUVs and pick-up trucks favoured over sedans that once ruled the country's roads.

Sales for all GM cars and trucks declined 11 percent year over year, with the company blaming the impact of hurricanes.

GM expects to record pretax charges of $3 billion to $3.8 billion related to these actions, including up to $1.8 billion of noncash accelerated asset write-downs and pension charges, and up to $2 billion of employee-related and other cash-based expenses.

Some social media users urged to boycott GM's cars in response.

Rivals Ford and Fiat Chrysler have both curtailed US vehicle production.

In a statement, Governor John Kasich said the news was "frustrating" but said he would work with GM to try to preserve the plant.

These decisions are expected to lead to savings of approximately $6 billion by the end of 2020: $4.5 billion in cost reductions and $1.5 billion in lower capital expenditure.

"You better get back in there soon - that's Ohio", Trump told reporters Monday, recounting what he said to GM Chief Executive Officer Mary Barra following the job cuts announcement earlier Monday.

More news: Prince Harry & Meghan Markle Are Moving to the Suburbs!
More news: The National Thanksgiving Turkey Pardoning Ceremony
More news: With Ohio State looming, MI still #4 in CFP

She also noted that tariffs on imported aluminium and steel had hit the company, but she stopped short of saying they had anything to do with the restructuring.

The salaried reductions amount to 15 percent of GM's North American white-collar workforce of 54,000. Barra said the company will double resources dedicated to electric and self-driving vehicles over the next two years. The company said this is part of a plan that restructures to cut costs and focus more on autonomous and electric vehicles.

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

The company says 5,901 hourly employees and 804 salaried employees work at these plants.

"GM is all in on a big risk of autonomous electric vehicle future, and one of the things they are doing is shoring up the profit so they can keep investing in that", Autotrader analyst Michelle Krebs said. Under Unifor's four-year contract signed in 2016, GM must give the union a year's notice before closing the plant.

"The UAW and our members will confront this decision by GM through every legal, contractual and collective bargaining avenue open to our membership", the union said in a statement.

That's cold comfort for Darryl Donnithorne 38, who said he was laid off by GM when it closed its Oshawa truck plant in 2008, He just got hired back a couple of months ago to install windshields on the pickups sent from Indiana.

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. It will also stop building models assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse.

"We are talking to (GM) right now about the products that they currently have" at underused auto plants such as Hamtramck in MI and Lordstown in OH, and whether they might be replaced with newer, more popular vehicles such as crossovers, said then-UAW President Dennis Williams.