General Motors launches austerity program

M.SchillingBusiness

Author: Marcus Schilling
Date: 28.11.2018

Closure of factories and job cuts

As part of the extensive cost-cutting program by US automaker General Motors (GM), 15 percent of jobs in North America are to be cut. In addition, several factories are considered for closure. Approximately 14,700 jobs would then be eliminated.

GM CEO Mary Barra justified the streamlining by saying that she wanted to adapt the company to the changing market conditions in order to achieve long-term success. By the end of 2020, the carmaker wants to save six billion dollars a year. The costs shall be reduced by 4.5 billion dollars and the investments by 1.5 billion dollars.

The saved costs shall be used to advance the development and production of electric cars and autonomous vehicles. Production should also be converted and made more future-oriented: Limousines, which are becoming less and less popular in the USA, shall be replaced by SUVs, trucks and minivans.

Collective bargaining next year

The factories concerned will be closed or converted for the production of other models. Collective bargaining with the unions is planned for next year to decide about this. This will involve two plants in Detroit, one in Ohio, one in Baltimore and one in Ontario, Canada.

Trump not enthusiastic

US President Donald Trump reacted disappointed to the announcement of GM. In his election campaign he announced a new flowering of the car production sites in the so-called rust belt in Michigan and Ohio. In an interview with the Wall Street Journal, he called on the carmaker to cease production of his vehicles in China. The company should rather manufacture in the USA.

Trump also told reporters that he was not happy that GM wanted to shut down its Lordstown facility in Ohio. After informing GM boss Barra of this, she assured him that the measure had nothing to do with the protective tariffs against China. The reason for the decision was poor sales figures. As a result, Trump allegedly advised her to bring a car that sells well onto the market.