GM to cut vehicle production in North America, halt some models

Virginia Carson
November 27, 2018

Not allocating product doesn't mean the plants will close, but it puts their future and the jobs of roughly 6,300 hourly and salaried factory employees-3,300 in the USA and 3,000 in Canada-at risk heading into contract negotiations with the UAW in 2019 and Canadian union Unifor in 2020.

Prime Minister Justin Trudeau says he is deeply disappointed General Motors is closing its Oshawa assembly plant and will do everything possible to help workers who will lose their jobs.

While General Motors has dramatically reduced production and assembly in Canada, it announced a plan in June 2016 to hire about 700 engineers to expand research into self-driving cars and other technology.

The US President told reporters that he told Ms Barra he was unhappy with the announcement. "This industry is changing very rapidly". "We will achieve this through a combination of voluntary and involuntary programs", she said. "We think it's appropriate to do it at a time, and get in front of it, while the company is strong and while the economy is strong". Its shares rallied 7.6 percent to $38.66.

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But as long as the tariffs remain in place, GM and other American automakers have little incentive to expand production and every incentive to find new supply chains and cost-cutting strategies to avoid the import taxes.

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The No. 1 USA automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America.

Taken together, the moves will deliver more than $6 billion in additional annual cash flow by the end of 2020, GM said.

Among the facilities on the chopping block are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars.

It's also a reason why the company is unlikely to take Trump's advice, offered Monday afternoon, to replace production of the Cruze with something else in Ohio.

Instead of saying it will shut down three auto assembly plants, GM said the plants "will be unallocated in 2019".

"The parties agreed that when management is considering the implementation of restructuring actions that would result in permanent job loss, management will give written notice [to the union.] In the case of a plant closure, the notice will be given one (1) year in advance". "That's a real mismatch in a market where 40 per cent of the vehicles sold are crossover utilities".

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Barra is reducing staff from operations that make conventional cars and hiring people who can design electric cars or add software prowess to GM Cruise LLC, the automaker's autonomous vehicle unit in San Francisco.

With U.S. vehicle sales lagging, that means several GM auto plants have fallen to just one shift, including its Hamtramck and Lordstown assembly plants.

GM is cutting more than 6,300 hourly and salaried workers at its plants and 15 percent of the salaried workers in North America for a total of more than 14,000.

The automaker said the plant is now operating at half capacity and has been hit by the "significant shift in buying patterns away from cars to favour trucks and SUVs".

About 335 work at the Warren Transmission plant, which produces six-speed transmission for the GMC Acadia, Chevrolet Impala and Cadillac XTS and Electric Drive Unit for Chevrolet Volt, Chevrolet Malibu Hybrid, and Buick Velite. It also plans to close propulsion plants in White Marsh, Maryland, and Warren, Michigan, in 2019, the company said in a news release.

Union officials said Monday morning that they were notified during the meeting that the plant will be idle as of March 1st, 2019 since no new product will be allocated to the plant.

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