Investors in the automotive industry will want to pay attention to the latest move by General Motors Co. after the U.S. No. 1 carmaker announced Nov. 26 its plans to transition from the traditional gas-powered vehicles to electric and autonomous vehicles. The decision will have a direct impact on the company's workforce in North America.
According to a recent Reuters report, GM will not only stop all production at assembly plants in Ohio, Michigan and Ontario in 2019, but will also cease to produce several models at the three plants when production resumes. While two more factories will close outside North America, Reuters states the Baltimore plant and an additional Michigan plant "have no products assigned" in 2019 and are "at risk of closure."
"GM said it will take pre-tax charges of $3 billion to $3.8 billion to pay for the cutbacks, but expects the actions to improve annual free cash flow by $6 billion by the end of 2020," Reuters reported. "Its North American salaried workforce, including engineers and executives, will be cut by 15%, or about 8,000 jobs. The company said it will cut executive ranks by 25% to 'streamline decision-making.'"
Behind the decision to stop production of certain vehicles are the U.S. tariffs on imported steel implemented under the Trump administration, the article noted, reportedly costing GM $1 billion. However, the workforce cuts were not related to the tariffs, but rather the changes in technology and the market.
—Andrew Michaels, editorial associate