Earlier this week, General Motors announced that it will lay off 14,000 workers and close five plants in North America. In addition, the company will discontinue the Chevrolet Cruz, Volt, and Impala and the Buick LaCrosse, Cadillac XTS, and Cadillac CT6.
Prior to the announcement, the company offered a buyout to 17,700 employees.
“We must take significant action and now while our company and the economy are strong,” [GM executives] said in talking points given to managers in October to discuss the severance plan with staff. CNBC obtained the “leader talking points,” and GM verified their authenticity.
An “intensely competitive” industry combined with pressure from rising commodities prices, interest rates and a difficult trade environment created a sense of urgency. “We need … to make the right pre-emptive moves so that we come out of this tough time ahead,” they said in the talking points.
A spokesman confirmed to CNBC that the company had been hoping for 8,000 voluntary separations. About 2,250 workers agreed to take the buyout.
The Future of the Car Industry
Vox reports that the restructuring will save the company $6 billion by 2020, and enable GM to focus on electric and self-driving cars.
“GM’s shuttering of plants is also a step toward its new focus on producing electric and autonomous vehicles; its new motto is ‘Zero Crashes, Zero Emissions, Zero Congestion,’” writes Aditi Shrikant at Vox. “In 2017, the company bought Cruise Automation, a San Francisco-based driverless car company. According to a press release, ‘resources allocated to electric and autonomous vehicle programs will double in the next two years.’”
Shortly after the announcement, President Donald Trump tweeted:
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including for electric cars.
A source tells CNN that GM does not receive “any significant federal subsidies … beyond a $7,500 plug-in tax credit, which goes to the consumer, not the company.”
At The National Review, Veronique de Rugy writes, “There are many reasons behind [the job cuts], including lower sales of some of GM’s models and the additional cost of $1 billion imposed by the metal tariffs.”
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