DETROIT — General Motors will close three assembly plants by the end of 2019, it said Monday, including Detroit-Hamtramck, Lordstown in Ohio and Oshawa in Ontario.
Approximately 5,600 jobs are at stake: roughly 1,500 in Hamtramck; 1,600 in Lordstown; and about 2,500 in Oshawa.
The Hamtramck plant makes the Chevrolet Volt and Impala, the Cadillac CT6 and the Buick LaCrosse.
“GM is continuing to take proactive steps to improve overall business performance, including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce,” the company said in a news release Monday.
“GM wants to stay in front of changing market conditions and customer preferences for its long-term success,” said GM Chairman and CEO Mary Barra told reporters in a morning briefing.
Barra said GM will end production at the plants during varied intervals, but it will stop production of the effected vehicles next year. Barra said, “We’ll still be providing those products until at least the end of 2019.” At that time, they will be no longer be produced for the U.S. market.
“What we’re doing is transforming this company,” Barra said. “This industry is changing very rapidly when you look at propulsion, autonomous driving and ride sharing. We want to be in front of it while the company is strong and the economy is strong,” she said.
GM may be cutting its capital expenditure by $4.5 billion, she said, but it will still invest in its core products such as pickups, SUVs and “some cars” where it has already redesigned the architecture for those products.
The move will not impact GM’s production and sale of its full-sized 2019 Chevrolet Silverado and GMC Sierra pickups, Barra said. Oshawa builds the previous generation pickups, which is helping as GM transitions to sales of the current model.
“Those are good architectures from a fuel economy perspective … we’ll continue to put those in the market, but we can take down our capital expenditures, while investing in electric and autonomous vehicles,” said Barra. “You will see a greater share invested in autonomous and electric vehicles, both from a capital expenditure and” increased hiring for electric and self-driving engineering jobs.
GM announced it will also cut salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making.
“We’re right sizing our capacity both for the demands of the marketplace and what we see occurring in the US and the global marketplace,” said Barra. “In the U.S. we see a very strong economy and we see opportunities around the globe. This is to make sure that GM is lean and ready to lead in the world in the cars our customers want and” the future of mobility.
The announcement is part of aggressive cost-cutting from the Detroit carmaker, which had a deadline last week for North American salaried workers who had at least 12 years with the company to accept a voluntary buyout offer. The Free Press reported that the company hoped to trim 7,000 white-collar jobs and has said it could move ahead with involuntary cuts if the number of workers stepping forward falls short.
Barra said GM will continue to hire new employees because it needs different skill sets to help develop electric and self-driving technology.
“We need to make sure we have the right skill set not only for GM today, but for the future so you will see us adding new people to the company even as we let people go,” said Barra.
She said people with technical experience are still needed across GM especially those with experience in electrification. But GM Cruise will continue to hire as well.
GM did not announce how many salaried workers have taken the voluntary buy-out package offered earlier this month. Barra said GM department heads across the company are looking at what jobs they really need going forward. In product development, for example, she said there are more virtual tools to do certain jobs than previously.
“For the first time in my memory, GM is leading the pack on tangible restructuring actions, and the dominoes are really starting to fall,” Jon Gabrielsen, an independent adviser to the auto industry. “This may not be the last plant closure for GM, and we have not yet seen Ford and FCA show their hands.”
While Ford is trimming its global white-collar workforce, it has said nothing about plant closures.
Auto sales hit record levels in 2016 and are slowing as automakers say they face challenges from both the slowing sales and tariffs on steel and aluminum as part of President Donald Trump’s trade war.
Like other automakers, GM is moving away from sedans to a lineup more focused on SUVs and trucks. It did not name any vehicle models Monday that it will eliminate.
“GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade,” the release said.
The company said its moves would save $6 billion by the end of 2020.