Mary Barra was hired to do a very difficult job: keep General Motors profitable.
Long known for its multitude of platforms that paralleled one another from brand to brand, GM has already tightened the belt mightily. Once, one would move from Chevrolet to Pontiac to Oldsmobile, then Buick and finally, if one’s wealth accumulated in sufficient fashion, to Cadillac. GM’s middle brands, Pontiac and Oldsmobile, got the shaft before Barra achieved her mantle.
Now GM is contracting its plants and its products even farther under her watch. The behemoth announced over the weekend that, as expected, its Oshawa, Ontario, Canada plant would close; the bad news was compounded Monday morning by reports that four other plants would close and, at minimum,14,000 well-paying jobs would be lost.
These moves parallel those made by Ford Motor Co. as these two large auto makers face slowing sales and shifting consumer desires for transportation.
Five General Motors plants will stop production next year; this will result in the layoffs of about 6,300 workers in both the United States and Canada. Salaried staff are expected to be reduced by another 8,000 to reach the 14,000+ reduction in personnel. Many of the salaried staff have already been offered severance packages; more are expected.
The five plants under closure orders include one in Lordstown, Ohio that makes the Chevrolet Cruze compact sedan and wagon. The Detroit-Hamtramck plant, where Chevy’s Volt, Buick’s LaCrosse and Cadillac’s CRT6 are constructed is also slated to be shut down; the Oshawa, Ontario, Canada factory that primarily constructs Chevy’s Impala – already slated for discontinuation – ends its run. Operations at transmission factories in the Baltimore, Maryland and Warren, Michigan areas are also being shut down.
The United Auto Workers union could demand the affected plants resume production, depending on the outcome of contract negotiations with the company in the coming year. UAW said the move “will not go unchallenged,” as GM closes these plants while expanding its Chinese and Mexican operations, calling these moves “profoundly damaging to our American work force,” said Terry Dittes, UAW vice president in charge of negotiations.
With low fuel prices, many Americans have moved from sedans to large trucks, which are far less efficient but more profitable for the auto manufacturers. There is also a profound shift to electric and hybrid vehicles, together with the advent of driverless vehicles, moves that have caused changes in manufacturing priorities.
The U.S. government’s adherence to tariffs has also adjusted the landscape of transportation, with tariffs on steel driving costs upwards and slashing GM’s profitability. On the other hand, news of plant closures and shifting priorities has been met with confidence by investors, who have migrated both GM and Ford’s stocks upwards when they announced these changes.