DETROIT -- General Motors plans to cut about 14,000 positions in North America and put five plants up for possible closure by the end of next year as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles, the automaker announced Monday.
The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees.
Most of the factories to be affected by GM's restructuring build cars that will not be sold in the U.S. after next year. Those factories could close, or they could get different vehicles to build. Their futures will be part of contract talks with the United Auto Workers union next year.
The restructuring 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. Just five years ago, cars made up about 50 percent of new-vehicle sales.
Cars to be eliminated include the Chevrolet Volt, Chevrolet Impala, Chevrolet Cruze, Cadillac CT6 and Buick LaCrosse.
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 is to include 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.
The company also said it will stop operating two factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.
At the North American 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.
GM's heavy-duty truck plant in Flint, Mich., will be increasing production and will need workers. Also, the company's plant in Arlington, Texas, where it builds its full-size SUVs, is ramping up to build the next-generation Chevrolet Tahoe, Chevrolet Suburban, Suburban XL and GMC Yukon.
The company confirmed it will add a third vehicle next year to its production lineup at its plant in Spring Hill, Tenn.
The planned cuts mark GM's first major downsizing since shedding thousands of jobs during the recession.
Ford Motor Co. has previously said it is restructuring and will lay off an unspecified number of white-collar workers. Toyota Motor Corp. also has discussed cutting costs, even though it's building an assembly plant in Alabama.
GM isn't the first to abandon much of the car market. Fiat Chrysler Automobiles got out of the small- and midsize-car business two years ago, while Ford announced plans to shed all cars but the Mustang in the U.S. in the coming years.
GM's announcement comes amid the backdrop of U.S. trade disputes with China and Europe that likely will lead to higher prices for imported vehicles and those exported from the U.S. GM CEO Mary Barra said the company faces challenges from tariffs, but she did not link the job reductions to them.
GM doesn't foresee an economic downturn and is making the cuts "to get in front of it while the company is strong and while the economy is strong," Barra told reporters.
"In the past, GM management didn't react as quickly -- they went through a sort of slow-speed crash that culminated in 2009 bankruptcy, and that's a lesson that was hard-learned," said Maryann Keller, an independent auto analyst in Stamford, Conn., who's written several books about the company. "This is a cyclical, highly competitive, slow-growing business. You can't continue producing unprofitable vehicles, especially when you're making crazy investments in mobility service business with no potential for profit in the foreseeable future."
GM's broad restructuring, announced just weeks after the company reported surprisingly strong profit, is a move reminiscent of what Ford did in 2006, two years before a worldwide credit crunch sent GM and Chrysler into Chapter 11 bankruptcy.
WORKERS WORRY
Factories that could be closed include assembly plants in Detroit; Oshawa, Ontario; and Lordstown, Ohio, as well as a transmission plant in Warren, Mich., and one near Baltimore.
"I don't know how I'm going to feed my family," Matt Smith, a worker at the Ontario factory, said Monday outside the plant's south gate, where workers blocked trucks from entering or leaving. "It's hard. It's horrible." Smith's wife also works at the plant. The couple have an 11-month-old child.
Workers at the Ontario plant walked off the job Monday but were expected to return today.
Arno Hill, the mayor of Lordstown, home of the hulking factory where GM now plans to stop producing the Cruze next year, said the mood in the village of about 3,000 people was "somber."
"I will say I'm not the happiest guy in town," Hill said in a phone interview. Still, he added, he was holding onto hope that GM would use the facility to build a new product.
"They said they were ceasing production, not shuttering," Hill said.
Jim Graham, the former president of the United Auto Workers chapter that covers employees at the Lordstown plant, called the announcement "depressing," adding: "Hopefully we can do something."
After the morning announcement, Barra headed for Washington to speak with White House economic adviser Larry Kudlow in a previously scheduled meeting, according to a White House official who spoke on condition of anonymity because the official was not authorized to discuss the meeting publicly.
President Donald Trump, who has made auto jobs a big part of his appeal to Ohio and other Great Lakes states that are crucial to his re-election, said lawmakers and his administration are exerting "a lot of pressure" on GM.
Trump said he was being tough on Barra. He said he told the company that the U.S. has done a lot for GM and that if its cars aren't selling, the company needs to produce ones that will.
At a rally near GM's Lordstown, Ohio, plant last summer, Trump told people not to sell their homes because the jobs are "all coming back."
The Detroit-based autoworkers union condemned GM's actions and threatened to fight them "through every legal, contractual and collective bargaining avenue open to our membership."
Bobbi Marsh, who has worked in assembling the Chevrolet Cruze compact car at the Ohio plant since 2008, said she can't understand why the factory might close given the strong economy.
"I can't believe our president would allow this to happen," she said Monday.
She now faces an uncertain future, not knowing whether the plant will close for good or if there's a chance it could find another use.
"Everything is up in the air," she said. "I don't want to give up hope for this facility and these people. I spend more time around them than my own family. It would be like breaking up a family."
Sen. Sherrod Brown, D-Ohio, said the reductions would be disastrous for the region around Youngstown, Ohio, east of Cleveland, where GM is one of the area's few remaining industrial anchors.
"GM received record tax breaks as a result of the GOP's tax bill last year, and has eliminated jobs instead of using that tax windfall to invest in American workers," he said in a statement.
Many of those who will lose jobs are now working on conventional cars with internal combustion engines. Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, adding that GM must adjust.
She said GM is still hiring people with expertise in software and in electric and autonomous vehicles.
The automaker said it was ending Chevrolet Volt production because the vehicle was meant to be a bridge to fully electric cars when it was introduced about a decade ago. The Volt has a small battery that can take it about 50 miles; it then switches to a small gasoline engine.
Since it was introduced, battery technology has improved dramatically. Now the full-electric Chevrolet Bolt can go up to 238 miles on a single charge.
Information for this article was contributed by Tom Krisher, Rob Gillies, John Seewer and Zeke Miller of The Associated Press; by Jamie L. LaReau of the Detroit Free Press; and by David Welch and John Lippert of Bloomberg News.
A Section on 11/27/2018