General Motors Company, America's largest carmaker, has announced painful actions that include firing at least 15,000 employees and closing three assembly plants in a move to re-direct its resources towards building electric cars it will sell in the United States and China.
GM CEO Mary Barra said her company will divert its money towards new technologies such as electric vehicles and autonomous vehicles, and new businesses such as robo-taxi services. She said GM is right-sizing its capacity for the realities of the marketplace.
This reality means there really is a much weaker consumer demand for combustion-engine cars and a marked preference for electric vehicles such as those made by Tesla, Inc. and a slew of electric car companies in China.
"This industry is changing very rapidly," said Barra. "These are things we are doing to strengthen our core business."
GM plans to launch a fleet of 20 new battery electric vehicles in North America by 2023. It will also introduce at least 10 new electric vehicles in China by 2020.
To get to this sweet spot, however, means GM has had to take a series of painful decisions that are angering its workers and U.S. president Donald Trump.
Barra said GM will considerably slash its car production in the United States and Canada. It will also stop building some low-selling car models. She said the company plans to halt production in 2019 at three assembly plants: the Lordstown small-car factory near Youngstown, Ohio; the Detroit-Hamtramck complex in Detroit; and the Oshawa, Ontario, assembly complex near Toronto.
GM will also stop building several models now assembled at those plants. These include the Chevrolet Cruze, the Chevrolet Volt hybrid, the Cadillac CT6, and the Buick LaCrosse. The Cruze compact car will no longer be produced in the U.S. starting 2019.
Plants in Baltimore, Maryland, and the suburban Detroit community of Warren, Michigan, both of which make powertrain components, have no products assigned to them after 2019 and are at risk of closure. GM said it will also close two other factories (still unidentified) outside North America.
These moves will allow GM to focus more of resources on electric and autonomous vehicles. GM has announced a plan to fire more than 15,000 employees in Canada and the U.S. as part of the planned move to electric and autonomous vehicles. GM, however, has been firing people to deal with plummeting car sales in North America.
GM said it's being forced to take these moves because of a declining market for traditional gas-powered sedans.
GM's massive employee firings and plant closures are the biggest restructurings for America's. No. 1 carmaker since its bankruptcy a decade ago. It might also mark a turning point for the North American auto industry.
Barra depicted the decision to put five North American factories on notice for potential closure and fire 15,000 employees as necessary to keep the company strong.
