The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
General Motors (GM) announced a major downsizing at the corporation. The US car company revealed that it is cutting production at many of its North American plants and laying off 15% of its workforce. The automaker’s stock rose after the initial news.
GM cuts plants and workers
GM said it would close four plants in the US states of Michigan, Maryland, and Ohio. The carmaker will also shut down a factory in the Canadian town of Oshawa, Ontario. All the operations in those locations will cease in 2019.
The corporation will reduce the number of salaried employees by laying off 10,000 workers. GM will also decrease its executive staff by 25% as well. Earlier in November, the company offered buyouts to 50,000 of its full-time workers to cut costs.
GM chief executive officer (CEO), Mary Barra, said that the changes are a necessary part of the carmaker’s major restructuring efforts.
‘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. We recognise the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,’ said Barra.
Why GM is downsizing
While GM had a profitable third quarter (Q3), sales for its sedans have been in deep decline. US consumers are buying sports utility vehicles (SUV’s) and trucks more than traditional four-door cars. As a result, the company could end production on sedans like the Chevrolet Volt hybrid, Buick LaCrosse, and Cadillac CT6.
GM has also been caught in the trade war between the US and China. US President, Donald Trump, imposed tariffs on imported Chinese steel that the automaker uses in its vehicles. The company noted that the increase in taxes have cost the corporation $1 billion.
Response to closures
Canadian Prime Minister, Justin Trudeau, expressed his support for the displaced workers in a tweet.
‘GM workers have been part of the heart and soul of Oshawa for generations - and we’ll do everything we can to help the families affected by this news get back on their feet,’ said Trudeau.
.jpg)
