DETROIT/WASHINGTON (Reuters) – General Motors Co will cut car production, stop building several low-selling car models, and slash its North American workforce, sources said on Monday, marking its biggest restructuring in North America since its bankruptcy a decade ago.
The General Motors assembly plant in Oshawa, Ontario, Canada November 26, 2018. REUTERS/Carlos Osorio
GM plans to halt production at three assembly plants in Canada, in Ohio and Michigan in the United States by not allocating new products, putting the future of those plants in doubt, the sources added.
The plants, Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly and Oshawa Assembly, all build slow-selling cars.
The issue will be addressed in talks with the United Auto Workers union next year. GM Chief Executive Officer Mary Barra made calls early on Monday to disclose the plans, the sources said.
GM declined to comment ahead of an expected announcement. Its shares were up slightly at $36.21 in early trading.
GM is expected to announce it will cut the Chevrolet Volt, Impala and Cruze, the Cadillac CT6 and XTS, and the Buick LaCrosse, according to a source familiar with GM’s plans.
Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1 billion.
A Canadian union, Unifor, which represents most unionized auto workers in Canada, said Sunday it was informed by GM that there would be no product allocated to the plant in Oshawa, about 37 miles (60 km) from Toronto, after December 2019.
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, shipped from Indiana.
GM has begun what is expected to be a long and expensive transition to a new model that embraces electrified and automated vehicles, many of which will be shared rather than owned.
The No. 1 U.S. automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America, with the aim of reducing headcount by 18,000. It plans to trim executive ranks by 25 percent, the source said.
With U.S. car sales lagging, several car plants have fallen to just one shift, including its Hamtramck and Lordstown, assembly plant.
A rule of thumb for the automotive industry is that if a plant is running below 80 percent of production capacity, it is losing money. GM has several plants running well below that. Consultancy LMC estimates that Lordstown will operate at just 31 percent of production capacity in 2018.
Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed U.S. car production. Ford said in April it planned to stop building nearly all cars in North America.
Reporting by David Shepardson, Paul Lienert; Additional reporting by Nick Carey; Writing by Nick Zieminski; Editing by Susan Thomas and Jeffrey Benkoe