GM to halt production at several plants, cut more than 14,000 jobs
The automaker plans to cut production at several factories and reduce its salaried workforce by 15 percent, more than 14,000 employees. The reductions are part of a massive restructuring that will cost up to $3.8 billion. The UAW responds by vowing to use “every legal, contractual and collective bargaining avenue” to fight the changes.
Robert Ferris | @RobertoFerris
General Motors said Monday it plans to effectively halt production at a number of plants in the U.S. and Canada next year and cut more than 14,000 jobs in a massive restructuring that will cost up to $3.8 billion.
In response, the United Auto Workers vowed to use “every legal, contractual and collective bargaining avenue” to fight the changes.
U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau also criticized the automaker’s decision.
“I am not happy,” Trump told reporters on the White House lawn Monday afternoon, speaking of CEO Mary Barra. “You know, the United States saved General Motors. For her to take that company out of Ohio is not good. I think she is going to put something back in soon.”
Trudeau took to Twitter earlier in the day to express support for the workers at the Oshawa Car Assembly Plant, in Ontario. “Yesterday, I spoke with @ GM’s Mary Barra to express my deep disappointment in the closure,” he said. She met with National Economic Director Larry Kudlow at the White House hours after making the announcement.
The Detroit automaker said plants in Ohio, Michigan, Maryland, and Ontario will be “unallocated” in 2019 and it will cease operations at two additional plants outside of North America by the end of next year. It will also wind down operations at propulsion plants in White Marsh, Maryland, and Warren, Michigan.
Although the decision effectively shuts down those plants, the company wouldn’t say outright that they are closing. Shuttering a plant is a matter of negotiation with the UAW, GM spokeswoman Stephanie Rice said in an email.
“We are announcing the cessation of certain products resulting in a number of plants being without allocated volume to produce,” she said.
The company plans to cut 15 percent of its salaried workers, resulting in a 25 percent reduction of its executive ranks, the company said. The cuts will eliminate more than 14,000 jobs in all, roughly 8,100 white collar positions and more than 6,000 factory jobs, according to the company.
GM employed 180,000 people as of Dec. 31 — 77,000 of which were salaried, according to a regulatory filing. About 51,000 employees were represented by labor unions, including the UAW.
“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,” said Terry Dittes, a UAW vice president who leads negotiations with GM.
The reorganization is estimated to save about $6 billion a year by the end of 2020, the company said. The company previously tried thinning its ranks through buyouts offered to some 18,000 eligible employees in October.
Former GM Vice Chairman Bob Lutz said the automaker historically would have raised sales incentives to try to sell more cars before resorting to plant closures.
“Nowadays GM looks at the hard reality, says we’ve got a demand problem on cars, what are we going to do about it. We have to shut some facilities and move production to truck plants,” Lutz said on CNBC’s “Halftime Report.” “So I think what we are seeing is a fast-acting and reality-oriented GM management.”
The largest U.S. automaker has invested heavily in crossovers, SUVs and trucks as consumer demand has shifted from traditional passenger cars. It is a move mirrored by decisions at several automakers, perhaps most notably Ford and Fiat-Chrysler. Ford has also said it plans to reduce its salaried workforce, telling investors Oct. 5 it will provide the details to those layoffs by the second quarter of next year.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” Barra said in a statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
Sam Huszczo, who owns SGH Wealth Management outside of Detroit, said many of his financial planning clients at GM told him they believe about 4,000 people with average salaries of around $120,000 already took buyouts offered last month.
About 2,250 people have already taken the voluntary buyouts, not 4,000, said spokeswoman Juli Huston-Rough. She declined to comment on their average salaries.
Trading in GM was briefly halted before the announcement. Its shares jumped as much as 7.8 percent in intraday trading before settling to a close of $37.65 a share, up 4.8 percent for the day.
CNBC’s Tyler Clifford and Eamon Javers contributed to this article.