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5 reasons why GM is cutting jobs, closing plants in a healthy economy

DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation. It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles. GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles. The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession. The company also said it will stop operating two additional factories outside North America by the end of next year. The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries. Here's a rundown of the reasons behind the cuts: Coding, not combustion CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines. "The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company." Shedding sedans The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors. "We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote. The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off.

GM delays truck plant shift so workers can watch Detroit Lions NFC Championship game

It would be difficult to overstate just how big of a deal it is for the city of Detroit and its residents (and residents of southeast Michigan in general) that the Detroit Lions not only made it convincingly into the NFL playoffs but found significant success in defeating the Los Angeles Rams in the Wildcard round and then the Tampa Bay Buccaneers the following week. But if there's one thing we can point to as an automotive-minded group, it's this: General Motors has delayed the start of the third shift at its Flint Assembly plant so that workers won't have to miss any part of the game. To emphasize the magnitude of this decision, it's important to note that the Chevrolet Silverado HD and GMC Sierra HD are built at the plant, and the popularity and, perhaps more importantly, profitability of those heavy duty trucks is so high that it's the only GM plant in Michigan that runs a third shift, as pointed out by the Detroit Free Press. The delay is roughly an hour in total, and workers won't be paid for that missing time. We doubt there will be any complaints. Granted, this isn't the first time GM has delayed starting a late shift due to a big sporting event. In prior years, delays have been recorded for some Super Bowls and for the in-state Michigan vs. Michigan State rivalry game at GM facilities in Lansing, Michigan. Still, GM's statement on why it would hold off production of such a lucrative pair of vehicles explains it better than we can: "We recognize the Detroit Lions playing in the NFC Championship game as a rare, unique opportunity that warrants this temporary schedule adjustment to allow employees to enjoy the game and make it to work on time." It's not GM's only show of Lions pride. Take a close look at the General Motors logo currently being displayed at the Renaissance Center, GM's headquarters in Detroit. General Motors is displaying its Motor City pride with a subtle logo redesign to honor the Detroit Lions as they continues their Super Bowl hunt. Read more: https://t.co/Jmc6bmMK6n pic.twitter.com/9bJJqOmwxB — Ad Age (@adage) January 23, 2024 The Free Press reached out to Ford and Stellantis to see if either of GM's rivals would be making shift adjustments as well. Ford has yet to provide a comment, but Stellantis, makers of the Ram truck and Jeep SUVs, has confirmed it will be running normal schedules at all of its facilities. For now, there's only one more question that needs answering: What if the game goes to overtime?

There's an impending shortage of new trucks in America's heartland

URBANDALE, Iowa — Jerry Bill is worried the novel coronavirus could hurt business at the Des Moines auto dealership he runs, but not because of a shortage of buyers for the big Ram pickups on his lot. "Our biggest issue will be if we don't get more inventory," said Bill, general sales manager of Stew Hansen Chrysler Dodge Jeep Ram, which sells around 2,700 new vehicles a year in Urbandale, a suburb of Iowa's capital Des Moines. After a drop in sales in April when consumers stayed home, Bill expects pickup truck sales to end May similar to where they were a year earlier. And if demand remains strong, Bill said he will run out of popular models in June. Fiat Chrysler began slowly restarting Ram truck assembly lines on Monday after a two-month shutdown. The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession of 2007-2009 because of lockdown measures aimed at slowing the spread of the coronavirus. Economists warn the second quarter will be much worse. Still, far from the lockdowns of states like New York, Michigan or Ohio, dealerships like Stew Hansen have provided FCA and Detroit rivals General Motors and Ford a rare bright spot: strong sales of pickup trucks in America's heartland. Overall U.S. sales of cars and light trucks crashed to the weakest pace in 50 years last month. But sales of big Detroit brand pickups, particularly in southern and western states less affected by the outbreak, significantly outperformed the market, industry executives and analysts said. Pickup trucks are one of the most profitable automotive segments in the world. They account for a huge portion of the Detroit automakers' profits and formed a huge lure for Peugeot, which expects to merge with FCA by early 2021. The pressure is now on to boost pickup truck production and send vehicles to dealers in parts of the country with dwindling supplies. That is particularly true for GM, which is running short of certain truck models after losing 40 days of production to a strike last fall. "If you don't have what someone wants, they can choose to go to another brand," said Cox Automotive analyst Michelle Krebs. 'Easiest swap ever' Detroit automakers in March rolled out large discounts — such as interest-free loans for seven years — to keep vehicles rolling off dealer lots.