Economy

General Motors' decision to cut workers, idle plants draws criticism from officials

General Motors' decision to cut workers, idle plants draws criticism from officials

GM said Lordstown is one of five factories up for possible closure as it restructures to cut costs and focus on autonomous and electric vehicles. Another two will close outside North America.

Shares were up 2.2 percent at $36.72 (R507.52).

The company has "unallocated" production from three auto factories (Oshawa, Detroit-Hamtramck and Lordstown), and two engine and transmission plants (Baltimore and Warren) after 2019.

GM will jettison the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year.

When GM ended production of the Chevy Cobalt at Lordstown, it had already announced that the plant would be retooled for the Cruze.

"These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle", said Mary Barra, chairman and CEO of the company, in a news release titled "General Motors Accelerates Transformation".

It's also a reason why the company is unlikely to take Trump's advice, offered Monday afternoon, to replace production of the Cruze with something else in Ohio. The union that represents its Canadian workers said in a statement that GM's expected decision does not "live up to the spirit" of certain commitments the company made to union members during 2016 contract negotiations.

General Motors' announcement that it planned to idle five manufacturing plants devastated working-class families in Michigan, Ohio, Maryland and Ontario. Follow the last link and read the Free Press's analysis and you come away thinking that GM chose this moment simply because the economy's so good. "We have a lot of pressure on them".

More news: Brexit withdrawal deal "agreed in principle"

The company has said the additional tariffs have cost GM more than $1 billion.

CBS News reports that the layoffs make up about 15 percent of GM's workforce.

"We are determined to do everything we can to convince General Motors to make Lordstown part of the future of auto manufacturing", he said. "That adds up to more than 8,000 jobs, after almost 18,000 salaried employees were offered buyout packages last week". While Wall Street embraced the news, sending GM stock up almost five percent, the announcement also sparked controversy.

Are other automakers planning similar cuts? In June, before Trump dropped another wave of tariffs on Chinese imports, GM warned the White House that the threatened tariffs could lead to "less investment, fewer jobs and lower wages" for its employees.

Detroit mayor Mike Duggan weighed in by saying, "This morning I spoke to Mary Barra and she advised me for the first time of the situation at the Detroit-Hamtramck Assembly Plant".

"This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce", said Terry Dittes, UAW vice president. Consultancy LMC estimates that Lordstown will operate at just 31 percent of production capacity in 2018.

Brown, a longtime labor union ally, said in a statement that "the company reaped a massive tax break from last year's GOP tax bill and failed to invest that money in American jobs". We want to make sure we're well-positioned. Most of the affected factories build cars that won't be sold in the USA after next year. We tried to get his attention on this issue two years ago. Ford said in April it planned to stop building almost all cars in North America.

The restructuring reflects the changing US and North American auto markets as a dramatic shift away from cars toward SUVs and trucks continues.


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