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GM to lay off 15 percent of salaried workers, halt production at five plants in U.S. and Canada

GM announced Nov. 26 that it plans to lay off 15 percent of salaried workers. This isn't the first time the company has faced trouble. (Video: Elyse Samuels/The Washington Post)

Amid global restructuring, General Motors announced Monday it would reduce its North American production and salaried and executive workforce.

The Detroit-based automaker said it would not be allocating any production to Oshawa Assembly in Ontario, Lordstown Assembly in Ohio and Detroit-Hamtramck Assembly in Michigan after December 2019. It will also stop allocating production at propulsion plants in White Marsh, Md., and Warren, Mich., after December 2019. The company will also be discontinuing production of low-selling models made at those plants throughout 2019, including the Chevrolet Impala, Cruze and Volt, the Cadillac CT6 and the Buick LaCrosse.

These changes are part of GM’s efforts to focus its resources on self-driving and electric vehicles, as well as more efficient trucks, crossovers and SUVs, the company said in a statement.

The company also said it will cut 15 percent of its salaried workforce, laying off 25 percent of its executives to “streamline decision-making.” GM also said it will close two plants outside North America by the end of 2019, but those locations have yet to be announced.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” chief executive Mary Barra said in a statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

Wall Street applauded the news, with GM’s stock closing up nearly 5 percent to $37.65.

The company said it expects to save $6 billion in cash as a part of the restructuring. The cost-cutting is crucial to GM’s aggressive strategy with efficient and electric vehicles said Michelle Krebs, an analyst with AutoTrader.

“GM is making a big bet on a future that is autonomous, connected and electric,” Krebs said. “It has to be extremely profitable now to finance that because no one knows when those vehicles will be commonplace.”

Ohio Sens. Rob Portman (R) and Sherrod Brown (D), however, both slammed GM’s decision to shut down the Lordstown plant, shaming the company for poor treatment of its workers.

“GM owes the community answers on how the rest of the supply chain will be impacted & what consequences its disastrous decision will have,” Brown tweeted Monday.

Congressman Tim Ryan, who represents Lordstown as part of Ohio’s 13th District, also blamed President Trump for the job losses, pointing out that Trump had promised workers in the region that jobs were “all coming back” when he visited last year.

“The Valley has been yearning for the Trump Administration to come here, roll up their sleeves and help us fight for this recovery,” Ryan said in a statement Monday. “What we’ve gotten instead are broken promises and petty tweets. Corporations like General Motors and the President himself are the only ones benefiting from this economy.”

GM has been searching for ways to cut costs, as it has suffered sliding sales in recent years in two of its most crucial markets: China and the United States. In October, it offered buyouts to 18,000 employees, Dow Jones reported. Last year showed signs of the first sustained slowdown since the global financial crisis, with U.S. auto sales falling about one percent in 2017, according to Kelley Blue Book. Continued declines of new car purchases have troubled auto companies, especially as they grapple with technology that may reshape the industry and brace for the impact of the Trump administration’s trade dispute.

When President Trump announced tariffs last summer, Detroit’s Big Three automakers — GM, Ford and Fiat Chrysler — all trimmed their profit forecasts for the rest of the year, citing the rising commodity costs that would lead to hikes in prices and manufacturing costs. GM took a hard stance, warning of the fallout within the auto industry and saying that the tariffs risked “undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs” in comments filed with the Commerce Department in June.

GM was one of a few large U.S. companies that didn’t immediately benefit from last year’s tax cut law because that company had stockpiled “deferred tax assets” from its rocky performance in the lead up to the financial crisis 10 years ago. Those deferred tax assets allowed GM to already pay a low tax bill each year, but the new law made those deferred tax assets less valuable. Still, GM’s top executives had said the company expected to benefit from the new tax law in the future, though some analysts had estimated it could take several years.

Rumors of the plant closure spread when Canadian union Unifor said in a statement Sunday night that the group had learned that there would be no product scheduled for the Oshawa Assembly Plant, which is the headquarters of GM Canada, past December 2019. The plant has been open for 65 years and employs about 2,500 people.

“Based on commitments made during 2016 contract negotiations, Unifor does not accept this announcement and is immediately calling on GM to live up to the spirit of that agreement,” Unifor said in the statement.

Uncertainty loomed ahead of the official announcement, with workers walking off the job in protest, CTV News reported.

"There’s people in there bawling their eyes out. We can’t get any answers,” one man told CTV News.

GM did not specify whether hourly workers at the five plants would be affected.