General Motors cuts 15% of Staff and Closes Factories

US manufacturer General Motors (GM) will cut 15% of its employees and stop production next year at 7 plants. The goal is to cut $ 6 billion from costs by the end of 2020. The company will drive more investment to the development of electric and autonomous vehicles.

The measures 

The company will release 14,700 employees, with total staff in the world at the end of last year at 180,000. The management has notified the Motor Workers' Union about their plans.

"The measures we are taking today will allow us to continue our transformation in order to be more flexible, sustainable and useful," Chief Executive Officer Mary Barra said in the company's announcement. "We are aware of the fact that we need to anticipate changes in the market and the tastes of consumers so that our company is in a good position to be successful in the long run."

Investors appreciated the news and the producer's stock jumped nearly 5% on Monday. In addition to the assembly plant in Oshua, Canada, the company wants to close another 4 in the US and two others outside North America in 2019. Earlier, the management announced that it would shut down its plant in Kunshan, South Korea next year. Some workers would transfer to truck and SUV plants where GM is increasing output, the company said. GM will also stop production of the Chevrolet Cruze, Cadillac CT6 and Buick LaCrosse. With the cut, the company is particularly focused on management positions, which are expected to fall by 25% to lighten the decision-making process. The company notes that the measures will affect the financial results for the last quarter of this year and the first of the following. For the implementation of the plan, the extraordinary costs will increase between 3 and 3.8 billion dollars. GM has offered buyouts to 18,000 retirement-eligible workers with a dozen or more years of service. It would not say how many have accepted the buyouts, but it was short of the company’s target because GM said there will be white-collar layoffs. 

Transition to the electrical era 

GM In fact, is beginning a long and expensive transition to a new business model that will focus on the production of electric and autonomous cars, many of which will be shared rather than the company's own. Staff cuts are continuing, which is part of the management's plan to cope with the negative effect of the decline in car sales in North America. As a result of the delays in sales, some of the plants have switched to one shift mode. And one of the important rules for the automotive industry is that if a production line operates below 80% of its production capacity - it loses. US GM rivals - Ford Motor and Fiat Chrysler Automobiles - are also restricting their production.