The cuts are a part of a plan to adapt to changing market demands, favouring SUVs over sedans and coupes, while also shifting to electric and self-driving vehicles, which GM sees as central to the future, NBC reported.
In the most unstable period for the company since the threat of bankruptcy eight years ago, General Motors will eliminate several North American assembly plants, as well as 15 percent of the workforce, which is about 14,700 jobs.
“We recognise the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,” said GM Chairman and Chief Executive Officer Mary Barra, who outlined her new plan during a conference call Monday morning.
The cuts will eliminate approximately 8,000 salaried workers, including 25 percent of executives, and an additional 6,000 hourly workers will either lose their jobs or be transferred, according to Vox. The Huffington Post also reported that GM has set aside $2 billion to pay for layoffs and buyouts.
The restructuring, which would include shutting down the Oshawa Assembly in Ontario, Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly in Michigan, Baltimore Operations in White Marsh, Maryland, and Warren Transmission Operations in Warren, Michigan, is aimed at saving the company $6 billion by 2020.
In a statement earlier this year to the Commerce Department, GM warned that President Donald Trump’s import tariffs “could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk fewer — not more — US jobs”. According to The Washington Post, there were also concerns that automakers might not make as many cars in North America to export to China and elsewhere because costs would be higher in the USMCA region than making the vehicles in Asia since the Trump administration had introduced tariffs on China and closed a new US-Canada-Mexican deal.
Trump told reporters Monday afternoon he was ‘not happy’ about the news, adding that that the US ‘has done a lot’ for GM, and that the auto giant ‘had better put something else’ in Ohio, one of the states where layoffs have been announced.
GM’s decision was criticised from both sides of the political spectrum. Senator Sherrod Brown (D-OH) tweeted that GM “owes the community answers on how the rest of the supply chain will be impacted & what consequences its disastrous decision will have on the Valley & Ohio”.
Senator Rob Portman (R-OH) tweeted similar sentiments, saying, “I’m disappointed w/ how the hardworking employees have been treated throughout this process”.
Unions in both the US and Canada have expressed their disappointment as well.
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The United Autoworkers Union (UAW) Vice President Terry Dittes said in a statement that “This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce”.
The president of UAW, Gary Jones, also commented to Vox that “The practice of circumventing American labour in favour of moving production to nations that tolerate wages less than half of what our American brothers and sisters make, must stop”.
GM isn’t the only automaker trying to restructure itself for the future. Earlier this year Ford also announced plans to eliminate thousands of jobs, NBC reported. The second-largest domestic automaker had already scrubbed plans for a second assembly line in Mexico last year due to declining passenger car sales.