G.M. to Idle Plants and Cut Thousands of Jobs as Sales Slow

[beaconlight94]

https://www.nytimes.com/2018/11/26/business/general-motors-cutbacks.html

General Motors said Monday that it planned to idle five factories in North America and cut several thousand blue-collar and salaried jobs in a bid to trim costs.

The action follows similar job-cutting moves by Ford Motor in the face of slowing sales and a shift in consumer tastes, driven in part by low gasoline prices.

The five G.M. plants will halt production next year, resulting in the layoff of 3,300 production workers in the United States and 3,000 in Canada. The company also aims to trim its salaried staff by 8,000.

 

[riss99]

@beaconlight94 This is typical of the auto industry. It's how things progressed from at least the 70's to 2008. When times are good, they run the plants with three shifts and pump out cars. When times are bad, they lay off and cut back.

Things were really bad in 2008-2009 and then slowly and steadily grew for 8-9 years. Now we are back to the normal cyclic auto industry.

 

[walwinter]

@riss99 Aren't they also into finance? I remember some radio piece on how Ford did better than the other domestic auto makers because they started getting into financing cars earlier. My understanding is that auto manufacturers have a bigger role in financing since 2008. I don't know if they underwrite loans or repackage and sell them, but I think that makes the future different from the past in some sense.

 

[fredfrank]

@walwinter GM was forced to sell off GM financing as an agreement of the government bail out. GM at this point doesn’t own their own financing.

 

[willm]

@fredfrank Ally Bank is the old GMAC finance unit that they separated with, but they got back into financing again by buying up a couple of banks after the bailout. They currently provide financing through GM Financial subsidiary.

 

[resjudicata]

@fredfrank VW does

 

[fredfrank]

@resjudicata Most car companies do. Ford does as well. GM lost their because of the bailout that they required back in 2008-2009.

 

[awedbyhim]

@riss99 So things are bad. But I was always told things are good now!?

 

[free_indeed23]

@awedbyhim Things are "bad" in terms of interest rates. Interest rates are higher and the auto market is driven largely by debt. Cars become more expensive due to the rising cost of debt. That cuts demand.

 

[bonewoman]

@awedbyhim Who said it was great?

Things are okay.

 

[imjalar]

@beaconlight94

The plants include three car factories: one in Lordstown, Ohio, that makes the Chevrolet Cruze compact; the Detroit-Hamtramck plant, where the Chevrolet Volt, Buick LaCrosse and Cadillac CT6 are produced; and its plant in Oshawa, Ontario, which makes the Chevrolet Impala

None of this surprised me. Those car lines are all getting beat out by much better competitors in those segments. CT6 was a cool car but such a fickle niche segment.

Another case of Detroit missing the mark, costing people jobs and blaming everyone but themselves.

 

[willm]

@imjalar Why does Buick even exist?

 

[zakithi]

@willm Big seller in China

 

[resjudicata]

@zakithi and Florida - I feel like every old person I know has a Buick, or did at some point in their life, mainly, post-retirement.

Edit: not factual, just being sarcastic

 

[kcrystina]

@willm It has its fans. My dad has never owned anything other than a Buick.

 

[tyler849]

@kcrystina Has he been in his mid 60s for the past 3 decades?

 

[zibi2392039]

@imjalar How are they blaming anybody? They are overcapacity and have poorly selling lines at a time of what looks like a slowing macroeconomic scene and they are cutting capacity while they are able. This seems like pretty smart business to me.

 

[imjalar]

@zibi2392039 They have poorly selling lines because they don't produce quality vehicles and don't invest in forward thinking R&D. That's solely management's fault.

Combine that with poor over hiring practices (which could be partially union's fault for quotas).

Smart business is making quality vehicles that people want--they pulled the usual Detroit. When the Cruze was announced it was framed as their hail
Mary pass in the compact market. It was doomed from the start. Per usual, Asian automakers and now Tesla (competing with Volt) are eating their lunch.

I haven't heard of any Asian automakers announcing layoffs due to poor sales, despite the fact that the majority of their vehicles sold in the US are assembled in the US and compete in the same markets.

In the articles they're blaming tariffs, their mysterious crystal ball timing of the impending economic downturn (though that is inevitable) and unions.

 

[iamjacksjesus]

@imjalar Your second paragraph is one huge problem, but its more internal policies to blame than unions. Whatever about factory employees, their salaried people (engineers, design, etc) is horrendously bloated with bad hires. The psa deal is influencing this quite a bit as well, I would speculate..

 

[when1959]

@beaconlight94 Was just on the bus with an old timer, looked to be approaching 70. Said he worked there for 30 years (Oshawa plant).