GM to reduce North American workforce by 15%

The company expects these actions to increase annual adjusted automotive free cash flow by USD 6 billion by year-end 2020 on a run-rate basis. “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” says GM Chairman and CEO Mary Barra, in a press release “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.” Adding to the cash savings of about USD 6 billion are cost reductions of USD 4.5 billion and a lower capital expenditure annual run rate of almost USD 1.5 billion. To reach its goal the company is going to transform its product development, and with this resources allocated to electric and autonomous vehicle programs will double in the next two years. Adding to this is an optimisation of the product portfolio. GM has recently invested in newer, highly efficient vehicle architectures, especially in trucks, crossovers and SUVs. GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimised, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade, the press release continues. GM also aims to increase its capacity utilisation due to changing customer preferences in the U.S. and in response to market-related volume declines in cars. Meaning that future products will be allocated to fewer plants next year. Assembly plants that will be unallocated in 2019 include: Oshawa Assembly in Oshawa, Ontario, Canada, Detroit-Hamtramck Assembly in Detroit and Lordstown Assembly in Warren, Ohio. This will also affect GM’s propulsion plants where the Baltimore Operations in White Marsh, Maryland and Warren Transmission Operations in Warren, Michigan will be unallocated in 2019. 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. With these manufacturing actions GM expects to significantly increase capacity utilisation. To further enhance business performance, GM says it will continue working to improve other manufacturing costs, productivity and the competitiveness of wages and benefits. But that is not all, the company is also transforming its global workforce to – as the company says – ensure it has the right skill sets for today and the future. Actions are being taken to reduce salaried and salaried contract staff by 15%, which includes 25 percent fewer executives to streamline decision making. Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.”