Parsing what GM means by closing 'unallocated' plants

Parsing what GM means by closing 'unallocated' plants

General Motors Co recently announced it was slashing production of struggling models and reduce its North American workforce.

The company also said it will stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.

The restructuring reflects the changing USA and North American auto markets as manufacturers continue a dramatic shift away from cars toward SUVs and trucks.

Plants that will be "unallocated" in 2019 include Lordstown, as well as Detroit-Hamtramck in MI and Oshawa Assembly in Ontario, Canada. Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars.

"These tend to be the lower-margin vehicles", GM's Chief Financial Officer Dhivya Suryadevara told reporters. He said the city's economic development team wanted to partner with the UAW to "come up with a solution that works for GM and the employees". GM boasts that the Oshawa's plant was "capable of building vehicles from every brand in the portfolio" and the "only assembly plant in North America capable of building both cars and trucks in the same plant".

Presumably this drama will end the way the Carrier drama of early 2017 ended, with a spotlight PR victory for the president followed by quiet layoffs once the cameras went away and widespread fears among employees that the plant would indeed eventually close at "a more politically opportune moment". And GM also isn't sure whether he'll make good on threats to impose 25 percent tariffs on vehicles imported from Canada and Mexico. Jennifer French, who represents Oshawa in the provincial legislature, said she finds the news "gravely concerning". GM said the cuts will boost automotive free cash flow by US$6 billion by the end of 2020 and result in one-time charges of up to US$3.8 billion in the fourth quarter of this year and first quarter of 2019.

UAW Vice President Terry Dittes called it a "callous decision" that would be "profoundly damaging to our American workforce".

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"We're going to fill up those factories or rip them down and build new ones", Mr. Trump told a cheering audience. He added that he's "not happy" about the announcement.

The announcement anxious GM workers who could lose their jobs.

The Lordstown plant became a target in the restructuring as its lone product, the Chevy Cruze sedan variant, has faced drastically plummeting sales over the last calendar year.

Asked about the predictions of severe economic impacts caused by climate change, Trump said: "I don't believe it".

Both U.S. vehicle assembly plants scheduled to stop production next year now build slow-selling passenger cars. Senator Sherrod Brown (D-OH) tweeted that GM "owes the community answers on how the rest of the supply chain will be impacted & what consequences its disastrous decision will have on the Valley & Ohio".

Youngtown is in a Democratic and labor stronghold, where President Donald Trump won over a surprising number of voters two years ago because of his promise to bring work back to the U.S.

In the GM press release, Barra said the decisions were made to reflect consumer preferences and the changing market conditions.

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