5 reasons why GM is cutting jobs, closing plants in a healthy economy; Workers and politicians ask: Why now?
Chongqing DIGG
AP, Nov 27th 2018 at 8:37AM
DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation.
It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles.
GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure 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. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession.
The company also said it will stop operating two additional factories outside North America by the end of next year.
The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries.
Here's a rundown of the reasons behind the cuts:
Coding, not combustion
CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines.
"The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company."
Shedding sedans
The restructuring also reflects changing North American auto markets as manufacturers continue to 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. That figure 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.
"We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote.
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 the U.S. and another 2,600 in Canada — but some U.S. workers could transfer to truck or SUV factories that are increasing production.
==
Trade war
The GM layoffs come amid the backdrop of a trade wars between the U.S., China and Europe that likely will lead to higher prices for imported vehicles and those exported from the U.S. Barra said the company faces challenges from tariffs but she did not directly link the layoffs to them.
President Trump on Monday rejected the idea that tariffs he imposed on steel and aluminum used by automakers, or tariffs he erected against China and those with which China has retaliated, played a role in GM's decision. China is a crucial market for automakers. GM has said the tariffs have cost it $1 billion. That's in relation to $6 billion in costs GM is trying to save in the restructuring.
=
[excerpt; see graphics for full article]
Reporting by Rob Gillies, John Seewer and Zeke Miller