GM slashing 15% of N. American salaried workers, discontinuing several vehicle models

By MarketsFOXBusiness

Holiday season layoffs from GM, brutal: Larry Kudlow

National Economic Council Director Larry Kudlow on General Motors' decision to lay off 15 percent of its salaried North American workforce.

General Motors said Monday it is cutting 15 percent of its salaried North American workforce, ending production of some slow-selling vehicles and halting production at several plants.

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Shares spiked on the news rising nearly 5 percent.

The largest U.S. carmaker also said it will halt production at facilities in Lordstown, Ohio, Hamtramck, Michigan, and Oshawa, Ontario.

TickerSecurityLastChange%Chg
GMGENERAL MOTORS COMPANY35.10-0.01-0.03%

Further plants in White Marsh, Maryland, and Warren, Michigan will be "unallocated." In addition to the previously announced closure of the assembly plant in Gunsan, Korea, GM will cease the operations of two additional plants outside North America by the end of 2019.

The moves are calculated to dramatically slash costs and capital expenditures.

"Contributing to the cash savings of approximately $6 billion are cost reductions of $4.5 billion and a lower capital expenditure annual run rate of almost $1.5 billion," GM said in a statement.

"Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making," CEO Mary Barra said.

GM expects to record pretax charges of $3 billion to $3.8 billion related to these actions, including up to $1.8 billion of noncash accelerated asset write-downs and pension charges, and up to $2 billion of employee-related and other cash-based expenses.

The company, which is shifting its focus to electric and autonomous vehicles, has been cutting jobs to deal with plunging car sales in North America and has been debating for months how to address shrinking car demand.

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As recently as last week, GM had been expected to announce as soon as this week some involuntary salaried layoffs after it did not get as many volunteers to accept buyouts as hoped.

About 18,000 of its 50,000 salaried employees in North America have been eligible for the buyouts.

The stepped up cost-cutting and restructuring at GM comes as many industry executives and analysts predict that overall vehicle sales in the United States will decline further in 2019 and 2020.

GM employs about 2,500 union staff in Oshawa which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks which are shipped from Indiana.