General Motors (GM) will stop production at seven plants next year as it seeks $6 billion (€5.2 billion) in cost savings to bolster the carmaker against a downturn in its home market and the impact of the global trade war.
GM on Monday outlined plans to cease production at three assembly plants and two engine plants in the United States and Canada, and two sites internationally, and slim product offerings in a bid to save costs. The group aims to lower costs by $4.5 billion (€3.9 billion) and reduce capital spending by $1.5 billion (€1.3 billion) a year.
The group will double resources allocated to electric and autonomous cars over the next two years, it added.
“We’re taking these actions while the company and economy are strong to stay ahead of what we all know are very challenging environments,” said GM chief executive Mary Barra.
The move comes against a backdrop of rising costs, falling car sales, and shifting consumer habits.
Trade tariffs have hurt the business, costing it $1 billion in raw material costs in the US.
“There have been a lot of headwinds,” Mrs Barra added, but denied that the company was expecting an imminent downturn in the US economy.
She said the carmaker was seeking to “right-size” the business, increasing the utilisation of its North American plants. US car sales fell last year and are expected to continue sliding into next year.
At the same time customer demands are changing, with a shift away from saloons towards sports utility vehicles and pick-up trucks.
GM offered buyouts to 18,000 staff last month, aiming to reduce its US salaried headcount.
On Monday, the company said it would issue no fresh work to three assembly plants – Oshawa in Ontario, Canada, Detroit-Hamtramck in Detroit, and Lordstown Assembly in Warren, Ohio – as well as two engine plants, Baltimore in White Marsh, Maryland, and one in Warren, Michigan.
The group will also seek to close two international plants by the end of next year.
Over several years the company has withdrawn from struggling or unprofitable markets, such as Europe, Russia and India.
– Copyright The Financial Times Limited 2018
