President Asserts ‘They Must Promptly Return to Ohio’ Following Impacts on Two US Plants and One in Canada Dominic Rushe and Reuters Monday, November 26, 2018, 16:21 GMT (First Published on Monday, November 26, 2018, 15:25 GMT)
General Motors has revealed its intention to suspend production at five North American facilities and reduce its workforce by 14,700 employees. This move is a response to declining sales of sedans and the repercussions of Donald Trump’s imposed tariffs.
GM’s decision to cease production at a Canadian car manufacturing plant and two additional ones in Ohio and Michigan will impact over 6,000 blue-collar jobs. Furthermore, the future of two transmission plants in the United States hangs in uncertainty as they are also slated for temporary closure.
These reductions will encompass 15% of GM’s white-collar workforce, affecting approximately 8,100 individuals. Concurrently, 18,000 GM workers have been approached with the proposition of voluntary redundancy.
Trump, who garnered electoral support in many of the states affected by GM’s resolution by pledging to safeguard their employment opportunities, voiced his displeasure with the decision. He conveyed, “We disapprove,” to reporters, adding, “This nation has extended considerable support to General Motors. They must promptly return to Ohio.”
Mary Barra, GM’s chief executive, was scheduled to convene with top White House economic advisor Larry Kudlow later on Monday.
Barra remarked during a conference call, “We are executing this measure at a juncture when both the company and the economy are robust to pre-emptively address evolving market dynamics.” Subsequently, GM’s stock price surged by 5.5% upon this announcement.
The automobile manufacturing plants – Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly, and Oshawa Assembly – primarily specialize in the production of slow-selling vehicles. Trump held a rally in close proximity to the Lordstown plant in July and urged employees not to liquidate their properties, asserting that “jobs are forthcoming.”
The matter will be deliberated during discussions with the United Auto Workers union in the coming year.
Cost-related pressures on GM and other automotive companies and suppliers have intensified alongside diminishing demand for traditional sedans. Furthermore, GM has disclosed that the tariffs imposed on imported steel earlier this year by the Trump administration have incurred losses amounting to $1 billion.
Michelle Krebs, an executive analyst at Autotrader, opined that Barra is “endeavoring to proactively address a potential crisis by implementing these reductions.” She elucidated that GM’s actions were triggered by a convergence of factors, including a downturn in the pivotal Chinese market, a potential decline in the North American market, shifting consumer preferences towards utility vehicles, and the consequences of tariffs and trade-related concerns.
GM is on the verge of suspending operations at an assembly plant in Canada. The Canadian union Unifor, which represents the majority of unionized autoworkers in Canada, revealed that GM had communicated the absence of product allocation to the Oshawa plant beyond December 2019.
Canadian Prime Minister Justin Trudeau conveyed his “deep disappointment” regarding this development, expressing on Twitter, “GM workers have been an integral part of Oshawa for generations, and we are committed to assisting the affected families in their recovery. Yesterday, I conversed with GM’s Mary Barra to express my profound disappointment about the closure.”
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The largest automobile manufacturer in the United States employs approximately 2,500 unionized workers in Oshawa, where it manufactures the Chevrolet Impala and Cadillac XTS sedans. Additionally, the plant conducts the final assembly of the high-demand Silverado and Sierra pickup trucks, which are shipped from Indiana.
GM has been deliberating for several months on how to respond to diminishing demand for automobiles, as disclosed by a source briefed on the matter. This issue is expected to resurface during GM’s contract negotiations with the UAW next year.
The corporation has initiated a lengthy and costly transformation towards a new transportation model that embraces electrified and autonomous vehicles, many of which will be shared rather than individually owned. GM hinted at its latest cost-cutting measures in late October when it proposed buyout offers to 50,000 salaried employees in North America.
Lagging sales in the United States have compelled several car plants to operate only a single shift, including the Detroit/Hamtramck Assembly plant and the Lordstown, Ohio, assembly plant.
Competing automakers Ford and Fiat Chrysler have also scaled down their car production in the United States. In April, Ford declared its intent to cease the production of nearly all car models in North America.