First, came the voluntary buyouts. Now, GM is ramping up its belt-tightening measures with cuts to factory and white-collar workers, plant closures in North America and the elimination of several car models as it tries to transform into a nimble company focused on high-margin SUV, crossovers and trucks and investments in future products like electric and autonomous vehicles.
The actions, which are meant to safeguard the automaker from an expected downturn in the U.S. market, will increase GM’s annual free cash flow by about $6 billion, including cost reductions of $4.5 billion and lower capital expenditure annual run rate of almost $1.5 billion by 2020. Ford took similar cost-cutting measures earlier this year.
GM said it will cut its salaried workforce in North America by 15% —and its executives by 25% — as well as no longer allocate products to three assembly and two propulsion plants, including the Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly in Michigan and Oshawa Assembly in Canada beginning in 2019. GM will stop allocating production at propulsion plants in White Marsh, Maryland, and Warren, Michigan after December 2019. That means factory workers at those plants will be laid off as well.
Union workers at the Oshawa plant walked out Monday in protest.
All of the products assembled at the Lordstown, Detroit-Hamtramck and Oshawa plants will no longer be produced by the end of next year. As a result, GM will phase out the Chevrolet Cruze compact car and Chevrolet Impala sedan, and the Cadillac CT6. At least one plug-in hybrid vehicle will also be phased out. The Chevy Volt is assembled Detroit-Hamtramck plant and its motor is made at the propulsion in White Marsh, Maryland.
The plans will affect nearly 15,000 workers.
Meanwhile, the company says it will double engineering resources allocated to electric and autonomous vehicle programs by 2020.
“We are taking these actions now, while the company and the economy are strong, to stay in front of a fast-changing market and to capitalize on growth opportunities as we push to achieve a vision of a world with zero crashes, zero missions and zero congestion,” GM Chairman and CEO Mary Barra said during a call with analysts Monday.
In October, GM offered voluntary buyouts to 18,000 salaried employees in North America who have at least 12 years of experience. GM gave these voluntary buyout employees until November 19 to decide whether to take the buyout offer. The company hasn’t said how many took the offer.
GM has been undergoing a transformation over the past four to five years, getting rid of expensive, money-losing programs like the Opel brand in Europe, and investing more into electrification and autonomous vehicle technology.