Development News Edition
Give Feedback

UPDATE 6-GM to slash jobs and production, cancel some car models -sources


Reuters Last Updated at 26-11-2018 20:48:38 IST
General Motors Co will cut car production, stop building several slow-selling models, and slash its North American workforce, sources said on Monday, marking its biggest restructuring in North America since its bankruptcy a decade ago.

GM plans to halt production next year at three assembly plants - Lordstown, Ohio, Hamtramck, Michigan, and Oshawa, Ontario, the sources added. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse, the sources said.

The issue will be addressed in talks with the United Auto Workers union next year. GM Chief Executive Officer Mary Barra made calls early on Monday to disclose the plans, the sources said.

GM declined to comment ahead of an expected announcement. Shares were up 2.2 percent at $36.72.

Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1 billion.

A Canadian union, Unifor, which represents most unionized auto workers in Canada, said Sunday it was informed by GM that there would be no product allocated to the plant in Oshawa, about 37 miles (60 km) from Toronto, after December 2019.

GM employs about 2,500 union staff in Oshawa, which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks, shipped from Indiana.

GM has begun what is expected to be a long and expensive transition to a new business model that embraces electrified and automated vehicles, many of which will be shared rather than owned.

The No. 1 U.S. automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America, with the aim of reducing headcount by 18,000. It plans to trim executive ranks by 25 percent, the source said.

With U.S. car sales lagging, several car plants have fallen to just one shift, including its Hamtramck and Lordstown, assembly plant.

A rule of thumb for the automotive industry is that if a plant is running below 80 percent of production capacity, it is losing money. GM has several plants running well below that. Consultancy LMC estimates that Lordstown will operate at just 31 percent of production capacity in 2018.

Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed U.S. car production. Ford said in April it planned to stop building nearly all cars in North America.

SLUMPING U.S. SEDAN SALES

An industrywide slowdown in passenger car sales started to pick up steam in 2017.

The shift by U.S. consumer preferences have been away from passenger cars to larger, more comfortable SUVs and pickup trucks has been swift and severe, leaving automakers scrambling to readjust.

As recently as 2012, passenger cars made up more than 50 percent of all U.S. new vehicle sales. Through the first nine months of 2018, that had fallen to a little over 31 percent.

More than 16 months ago, the UAW confirmed that it was discussing with GM the potential threat to plants and jobs from slumping U.S. sedan sales.

While industry-wide passenger car sales were down 13.2 percent through the first nine months of the year, pickup truck and SUV sales rose 8.3 percent. As well as being roomier, the fuel economy on SUVs and crossovers has improved significantly.

Sales of Cruze, built at Lordstown, fell 27 percent through September 2018.

Impala, which is built at Oshawa and Hamtramck, was down 13 percent.

Buick LaCrosse and Cadillac CT6, which are built at Hamtramck, were down 14 percent and 11 percent, respectively. (Reporting by David Shepardson, Paul Lienert; Additional reporting by Nick Carey; Writing by Nick Zieminski; Editing by Susan Thomas and Jeffrey Benkoe)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


add banner

LEAVE COMMENT