General Motors will cut up to 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles, the automaker announced Monday.
The reductions could amount to as much as 8 percent of GM’s global workforce of 180,000 employees.
The restructuring reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago.
GM is shedding cars largely because it doesn’t make money on them, Citi analyst Itay Michaeli wrote in a note to investors.
“We estimate sedans operate at a significant loss, hence the need for classic restructuring,” he wrote.
The reduction includes about 8,000 white-collar employees, or 15 percent of GM’s North American white-collar workforce. Some will take buyouts while others will be laid off.
At the factories, around 3,300 blue-collar workers could lose jobs in the U.S. and another 2,600 in Canada, but some U.S. workers could transfer to truck or SUV factories that are increasing production. The cuts mark GM’s first major downsizing since shedding thousands of jobs in the Great Recession.
The company also said it will stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.
General Motors Co.’s pre-emptive strike to get leaner before the next downturn likely will be followed by Ford Motor Co., which has said it is restructuring and will lay off an unspecified number of white-collar workers. Toyota Motor Corp. also has discussed cutting costs, even though it’s building a new assembly plant in Alabama.
GM isn’t the first to abandon much of the car market. Fiat Chrysler Automobiles got out of small and midsize cars two years ago, while Ford announced plans to shed all cars but the Mustang sports car in the U.S. in the coming years.
The layoffs come amid the backdrop of a trade wars between the U.S., China and Europe that likely will lead to higher prices for imported vehicles and those exported from the U.S. GM CEO Mary Barra said the company faces challenges from tariffs, but she did not directly link the layoffs to them.
GM doesn’t foresee an economic downturn and is making the cuts “to get in front of it while the company is strong and while the economy is strong,” Barra told reporters.
Factories that could be closed include assembly plants in Detroit; Oshawa, Ontario; and Lordstown, Ohio, as well as transmission plants in Warren, Michigan, and near Baltimore.
The announcement worried GM workers who could lose their jobs.
“I don’t know how I’m going to feed my family,” Matt Smith, a worker at the Ontario factory, said Monday outside the plant’s south gate, where workers blocked trucks from entering or leaving. “It’s hard. It’s horrible.” Smith’s wife also works at the plant. The couple has an 11-month-old child at home.
Workers at the Ontario plant walked off the job Monday but were expected to return today.
After the morning announcement, Barra was to head for Washington to speak with White House economic adviser Larry Kudlow in what was described as a previously scheduled meeting, according to a White House official who spoke on condition of anonymity because the official was not authorized to discuss the meeting publicly.
President Donald Trump, who has made bringing back auto jobs a big part of his appeal to Ohio and other Great Lakes states that are crucial to his re-election, said his administration and lawmakers are exerting “a lot of pressure” on GM.
Trump said he was being tough on Barra. He said he told the company that the U.S. has done a lot for GM and that if its cars aren’t selling, the company needs to produce ones that will.
At a rally near GM’s Lordstown, Ohio, plant last summer, Trump told people not to sell their homes because the jobs are “all coming back.”
Most of the factories to be affected by GM’s restructuring build cars that will not be sold in the U.S. after next year. They could close or they could get different vehicles to build. Their futures will be part of contract talks with the United Auto Workers union next year.
The Detroit-based union has already condemned GM’s actions and threatened to fight them “through every legal, contractual and collective bargaining avenue open to our membership.”
Bobbi Marsh, who has worked assembling the Chevrolet Cruze compact car at the Ohio plant since 2008, said she can’t understand why the factory might close given the strong economy.
“I can’t believe our president would allow this to happen,” she said Monday.
She now faces an uncertain future, not knowing whether the plant will close for good or if there’s a chance it could find another use.
“Everything is up in the air,” she said. “I don’t want to give up hope for this facility and these people. I spend more time around them than my own family. It would be like breaking up a family.”
Democratic Sen. Sherrod Brown said the move will be disastrous for the region around Youngstown, Ohio, east of Cleveland, where GM is one of the area’s few remaining industrial anchors.
“GM received record tax breaks as a result of the GOP’s tax bill last year, and has eliminated jobs instead of using that tax windfall to invest in American workers,” he said in a statement.
Many of those who will lose jobs are now working on conventional cars with internal combustion engines. Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust.
She said GM is still hiring people with expertise in software and electric and autonomous vehicles.
GM will stop producing cars and transmissions at the plants through 2019. In all, six car models were scrapped, leaving the company with nine remaining car models.
The automaker said it was ending production of the Chevrolet Volt,which has a small battery that can take it about 50 miles before switching to a small gas engine.
Since the Volt was introduced, battery technology has improved dramatically. Now the full-electric Chevrolet Bolt can go up to 238 miles on a single charge.
GM builds full-size Chevrolet and GMC pickups in Mexico, and it recently announced that a new Chevrolet Blazer SUV will be built there. Also, GM imports the Buick Envision midsize SUV from China.
Janesville’s reserve of vacant industrial land will grow by 47 acres after the city council on Monday night unanimously authorized purchase of a parcel on the city’s east side.
The city will buy the 47-acre site, located at 3901 Enterprise Drive, from Grainger for $1.3 million. Economic Development Director Gale Price said the move adds to Janesville’s stockpile of city-owned, development-ready industrial land—a stockpile that is “on the low side” compared to other nearby communities.
Price estimated that Janesville had roughly 135 acres of such land. That land is scattered throughout the city, and some parcels are as small as 5 acres.
In comparison, Beaver Dam has a 400-acre site ready for industrial development.
The 47 acres Janesville bought just east of Grainger was supposed to house an expanded headquarters for Lab Safety Supply, Grainger’s corporate predecessor, in the early 1990s. That never happened, and Grainger has since decided its current property is big enough, Price said.
The land is not intended for a specific future occupant currently in development talks with Janesville, but having it under city control could help Janesville recruit a company, Price said.
City ownership is one of the few tools Wisconsin municipalities have to compete industrially and is a “valuable incentive” for a project.
“The development community has built a relationship with us as being the primary land developer,” Price said. “There’s an assurance as to how we’ll work with them. There’s an assurance as to how we’ll move forward with a project in this kind of situation.
“It does benefit the developer if they’re not tying up capital in the land and infrastructure construction if the city’s doing it.”
Janesville’s control of a 235-acre tract of land and the city’s decision to extend Innovation Drive through the site helped show Dollar General the land was ready to support a warehouse, Price said.
The new acquisition is already within city limits, but any future acquisition of industrial-ready land would likely need to be annexed, he said.
After a heated discussion Monday, the Milton School Board directed school district officials to draft a $59.96 million capital referendum resolution to potentially present to voters in spring.
Sparks flew among board members before the 6-1 vote. Board member Brian Kvapil cast the sole opposing vote.
Kvapil said allowing the district to draft a resolution now was “putting the cart before the horse” because the school board did not discuss the possibility of splitting the referendum into two questions—one for a new pool at the high school and the other for the rest of the facilities needs.
Board member Diamond McKenna said she suggested splitting the referendum into two questions at a previous meeting, but the board wasn’t interested.
Kvapil acknowledged McKenna’s previous effort but said the timing was too early.
Kvapil, who has been known as the voice of dissent during the district’s last two referendum attempts, said several community members have suggested to him that the district make the pool a separate question.
The other six board members said they had not heard that idea but have heard a lot of support for a new pool.
Kvapil said his motivation for presenting the option of two referendum questions was not to discourage a new pool but to let people decide what they want.
Perhaps the hottest point of contention during the discussion was whether the pool should be considered an academic need.
Board President Tom Westrick argued against making the pool a separate referendum question because the pool serves an academic need, just like the other components of the referendum. He said he considered the pool a classroom.
“It doesn’t have to be,” Kvapil said, adding that other schools don’t have pools.
Kvapil earlier had suggested the pool was more of an athletic need.
Anna Quade, a student council representative, interjected, saying the pool was an important part of physical education for students from elementary to high school age. Her comment sparked applause from the audience.
As previously reported, the 50-year-old pool needs about $1 million worth of work to remain operational. Addressing the pool’s immediate needs would extend its life about 10 years.
Board member Karen Hall and McKenna stressed that no referendum will ever please everyone.
The resolution to be drafted will include renovations and additions at the middle school and all four elementary schools. The high school would get gym and STEM upgrades, additional classroom space and a new pool.
The solution was chosen from four options presented by Plunkett Raysich Architects, which was asked by the board to develop options that met districtwide needs for less than $60 million.
The board must approve a resolution by mid-January to get the referendum on the April ballot.