GM To Cut North American Workforce

Nov 26, 2018
Originally published on November 26, 2018 4:20 pm
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RACHEL MARTIN, HOST:

America's largest automobile manufacturer has announced a major restructuring. General Motors says it is cutting 15 percent of its white-collar workforce. The company also said it may close as many as five plants in North America. This comes at a time when consumers are buying more trucks and SUVs but far fewer cars. So GM says it's trying to adapt to those changing habits of Americans. With us now, NPR's Jim Zarroli. Hey, Jim.

JIM ZARROLI, BYLINE: Hi, Rachel.

MARTIN: I just gave the broad contours there, but can you just tell us more specifics on this announcement?

ZARROLI: Yeah. General Motors put out a statement a little while ago. So this information is still pretty new. And what they said was that several plants will be unallocated in 2019. This means they will no longer be needed to do what they do now, essentially. And these include a plant in Ontario, a plant in Detroit, the Lordstown assembly plant in Ohio. These are assembly plants that make cars. There are also two transmission plants, one of them in Warren, Mich., and one in White Marsh, Md. As I said, the company says these will be unallocated, which means they're no longer needed to do what they do now. So there will be some jobs lost. There will be buyouts, also some layoffs. And this will save GM about $6 billion in annual costs by 2020.

MARTIN: So just to be clear, those - if those plants actually close, which - it sounds like this is just the beginnings of that process - those would be blue-collar manufacturing jobs that would be lost on top of the white-collar cuts that they're announcing today.

ZARROLI: Yeah. But all of this has to be negotiated. I mean, the company, as I said, has used this word unallocated, which means the plants aren't needed. So there will be negotiations with the union in the coming months to sort of determine which jobs will be targeted. The company expects that some of - these some of the workers will take buyouts and some of them will be laid off.

MARTIN: So why is this happening? I mean, I alluded to some of this in the intro - that Americans just aren't driving as many smaller vehicles. Is that what this is about?

ZARROLI: Right, cars. Car sales in North America have really been plunging. So the company is doing - is going where the profits are, which is trucks and SUVs. And then just more long term, there's the shift to electric cars and hybrids, even driverless cars. That's sort of the long term. That's - there's a feeling that that's the future of the industry. Ford has - is moving in a similar direction, by the way. It has ended, say, manufacture of all cars in the U.S. except the Ford Mustang.

MARTIN: So GM does a lot of business in China. Could the trade tensions between China and the Trump administration - has that played a role, perhaps, in this decision?

ZARROLI: Yeah. I think it - China is actually GM's biggest market. But China is - China's economy is still, you know, strong by Western standards. But it is slowing down. So there's concern about sort of just where the market is, where sales are going. Will that be as good a market as it has? Been. And also, just in general, the trade tensions, the tariff war between the United States and China is sort of a factor right now. Where is that going to go?

MARTIN: These companies just don't like the instability of all of it.

ZARROLI: Right. Right. But also, you know, just here in the United States, where the economy is really widely expected to slow down next year. There are questions about trade not just with China but other places. And we have rising interest rates. The Fed is increasing rates. And that's - that usually affects car sales. So there are just a lot of questions about where the market is going, whether sales have peaked. And I think GM is just trying to sort of get ahead of what it sees as an inevitable downturn.

MARTIN: NPR's Jim Zarroli reporting in New York about those cuts that GM is making. Thanks so much, Jim.

ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.