GM closing 5 North American plants, chopping nearly 7,000 jobs, slashing car production

GM closing 5 North American plants, chopping nearly 7,000 jobs, slashing car production

Up to $3.8 billion restructuring effort would follow Ford's near exit from the car business, slashing jobs in Ohio, Michigan, Maryland, and Canada.

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November 27, 2018
By Robert Schoenberger

A 2014 Chevrolet Impala moves down the assembly line at General Motors' Oshawa Assembly, the largest of five North American plants that the automaker plans to shutter by the end of 2019.

Cleveland, Ohio – General Motors plans to close five North American assembly and components plants by the end of next year, cutting 6,700 manufacturing jobs, and slashing white collar employment throughout the company. Also closing are the Gunsan plant in South Korea and two other international plants.

The nation’s largest automaker billed the changes as needed to adapt to a changing marketplace, not a preparation for an expected slowdown in the economy.

GM Chairman and CEO Mary Barra said, “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

GM’s transformation mirrors steps that Ford announced earlier this year to nearly exit the car side of the consumer auto industry. While Ford plans to strip down to the Mustang and a version of the Focus, the GM plans call for Buick to go down to two cars, Chevrolet to drop to two or three, and Cadillac to drop to one.

Closing plants are:

  • Oshawa Assembly: 2,600 hourly employees, 300 salaried – produces the Chevy Impala and Cadillac XTS sedans and the outgoing version of the Chevy Silverado pickup. The Canadian plant is set to close by the end of 2019.
  • Lordstown Assembly: 1,435 hourly employees, 183 salaried – produces the Chevy Cruze compact car. Down to one shift as small car sales fell, GM plans to end Cruze production in Ohio by March 1, 2019.
  • Detroit-Hamtramck Assembly: 1,348 hourly, 194 salaried – produces the Buick LaCrosse, Chevy Volt, Cadillac CT6, Chevy Impala. Volt and LaCrosse production is set to end by March 1, 2019; CT6 and Impala production by June 1, 2019.
  • Warren Transmission: 265 hourly employees, 70 salaried – produces 6-speed transmissions for the XTS, Impala, and the Chevy Malibu and electric propulsion systems for the Volt. Production is set to end Aug. 1, 2019 in the Detroit area.
  • Baltimore Operations: 253 hourly, 57 salaried – produces transmissions for the outgoing generation of full-sized pickups. Production in Maryland is set to end April 1, 2019.

The United Auto Workers (UAW) union vowed to fight the closures through every “legal, contractual, and collective bargaining avenue open to our membership.”

The union’s four-year contract with GM ends in September 2019, so negotiations on a new deal were set to begin during the summer. The 2015 contract did not offer product guarantees to the Lordstown or Detroit-Hamtramck plants (Oshawa is covered by Canada’s Infor union) or the components facilities.

The 2015 contract called for a moratorium on plant closures but left the company some leeway to close facilities for a “market-related volume decline.” Sales of the cars produced at the closing plants have fallen sharply throughout the past three years as cars in general have fallen out of favor in the U.S., with most shoppers opting for SUVs and crossovers.

“This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce,” said Terry Dittes, UAW vice president and director of its GM Department. “GM’s production decisions… puts profits before the working families of this country whose personal sacrifices stood with GM during those dark days.”

The UAW specifically criticizes three products – the upcoming Chevy Blazer that will be built in Mexico (at a facility that used to produce versions of the Cruze), the low-volume Buick Cascada convertible that is imported from Poland, and the Buick Envision crossover imported from China. The union says any of those vehicles could be moved to the U.S. to support jobs here.

UAW President Gary Jones said, “The practice of circumventing American labor in favor of moving production to nations that tolerate wages less than half of what our American brothers and sisters make, must stop. More importantly, we must understand that these companies, including GM, are no longer in trouble. They are recording annual profits in the tens of billions.”

President Donald Trump, who won Ohio with the strong support of Lordstown's Mahoning Valley region, said he strongly opposes GM's decision.

"This country's done a lot for General Motors, you better get back in there soon," Trump said when asked about the Ohio job losses in front of the White House. "They say the Chevy Cruze is not selling well. I say get a car that is selling well and put it back in... I have no doubt that in a not-too-distant future, they'll put something else, they better put something else in."

Several politicians made similar criticisms, though others pledged to work with GM to explore other opportunities at the plants. Workers at closing plants will be offered jobs at other GM facilities (several plants making crossover and SUVs are adding shifts) or offered retraining assistance, early retirement benefits, or other benefits. GM expects to face up to $3.8 billion in financial charges to deal with the closures.

In Canada, Unifor National President Jerry Dias said, “Unifor does not accept the closure of the plant as a foregone conclusion. Oshawa has been in this situation before with no product on the horizon, and we were able to successfully make the case for continued operations. We will vigorously fight again to maintain these good-paying auto jobs.”

As with Ford’s announcement in April that it would end most of its car production, GM’s plans recognize the difficulty of selling cars in the U.S. Cars have fallen from roughly half of U.S. sales in 2012 to about one-third last year. And that trend has continued in 2018 – general auto sales have been flat or slightly higher, but that has all come from crossovers and SUVs.

Following the plant closures, GM’s car lineup will be:

  • Cadillac – The CT5 replacement for the CTS. The ATS small car is set to end production this year, and the new plans call for the cancellation of the XTS and CT6. A few years ago, Cadillac billed the CT6 as the future of luxury sedans, pioneering new manufacturing techniques to support it. However, sales were disappointing as it launched just as car sale declines accelerated.
  • Buick – Cascada convertible, Regal sports sedan. No Buick cars will come from North America following the plant closures. As already noted, the Cascada comes from Poland in small numbers and has been on the bubble for cancellation for years. It’s fairly cheap to import from Europe, and sales were fewer than 6,000 last year, and down another 25% in 2018. The Regal (11,559 sold last year, sales are up 22% this year) is made in Germany by the PSA Groupe which bought GM’s Opel division in 2017. That sale calls for PSA to continue supplying the Regal to GM.
  • Chevrolet – Bolt EV electric car, Camaro, Corvette, Malibu mid-sized sedan, Sonic subcompact, Spark mini-car. The end of the Cruze and Impala, both high-volume products in their heydays, guts the bulk of Chevy’s car volume, leaving the Malibu as the only high-volume car at the brand. The Bolt is on track for about 15,000 sales this year, and the Sonic and Spark will likely combine for about 50,000. Even though sales are down 26.5% this year, the Cruze is still on track for about 145,000 units this year, and the Impala (down 13.4% year-to-date) is on track for about 60,000 sales.

In addition to the plant closures and car cancellations, GM plans to cut salaried positions companywide by 15%, including a 25% cut in executive positions. Barra said the company will continue to hire people with needed skillsets, such as engineers with expertise in autonomous and battery-powered cars, while lowering its staffing levels for some existing technologies.

“GM has recently invested in newer, highly efficient vehicle architectures, especially in trucks, crossovers, and SUVs,” company officials said. “GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75% of GM’s global sales volume will come from five vehicle architectures by early next decade.”

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 18 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net