GM plans job cuts, factory closings by 2019-end

Bloomberg

General Motors Co will cut more than 14,000 salaried staff and factory workers and close seven factories worldwide by the end of next year, part of a sweeping realignment to prepare for a future of electric and self-driving vehicles.
Four factories in the US and one in Canada could be shuttered by the end of 2019 if the automaker and its unions don’t come up with an agreement to allocate more work to those facilities, GM said in a statement. Another two will close outside North America. The Detroit-based company’s shares surged on the plan, which includes abandoning some of its slower-selling sedan models.
The planned job reductions, which triggered political pushback in the Midwest US and Canada, come on the heels of surprisingly strong third-quarter earnings. GM Chief Executive Officer Mary Barra is trying to make the company leaner as US auto demand slides from a record in 2016 and sales in China — GM’s other profit center — are also in a slump. Barra is also shifting resources towards building electric cars and, eventually, vehicles that drive themselves.
“We’re taking these actions while the economy is strong,” Barra told reporters in Detroit. “This industry is changing very rapidly. We want to make sure we’re well-positioned. We think it’s appropriate to do it while company is strong and the economy is strong.”
GM jumped as much as 7.9 percent to $38.75, the highest since July, in New York trading. The stock is still down about 7 percent this year.
The plan to lop 15 percent of salaried workers follows a round of buyouts that GM offered to about a quarter of its longer-tenured workforce at the end of October. GM said the cuts will boost automotive free cash flow by $6 billion by the end of 2020 and result in one-time charges of up to $3.8 billion in the fourth quarter of this year and first quarter of 2019.
GM also said that the company will jettison the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year. The Chevy Volt plug-in hybrid will also be dropped along with the Chevy Cruze compact, which will be made in Mexico for other markets.
Too many of GM’s factories are operating on a single shift to build models that have fallen out of favour, leading its plants to run about 1 million vehicles short of their full capacity,
said Kristin Dziczek, vice president of industry, labour and economics for the Center for Automotive Research in Ann Arbor, Michigan.