General Motors Employee Layoff: Why 6000 employees are getting laid off and 3 plants are being restricted.

Written by: Joshua Munson

General motors announced that they are planning to lay off 6000 jobs by February 4th. Their current restructuring plan is set to affect 8000 workers of their workers over 3 of their production facilities. [1]

Is it the industry?

The current projected outlook for global auto sales by Moodies was between 1-2% in 2019.[2] The numbers show a slight drop off in the increase of sales from previous years, but however, do indicate that sales are still increasing.

Is it an internal issue at General Motors?

While current news sources are speculating everything from the CEOs commentary on lagging divisions, a desire to increase automation, and even some are saying it’s the direct result of Trump’s tariffs on China.

All of these suggestions have merit. GM doesn’t want to invest in outdated industries, pay workers they don’t need, or expect to sell as many cars to china when they are being hit with tariffs.

Conclusion on the layoffs:

From the commentary directly from G.M, the layoffs happened for a few reasons.

  1. GM’s earnings will be reported to shareholders on next Wednesday. The layoffs and plant shutdowns are expected to save the company 6 billion dollars in 2019 alone. [1] Since GM in 2018 had a very optimistic look to growing it’s sales in the final quarter of 2018. [3] This would lead me to conclude that GM likely missed their forward guidance on sales or earnings and is making a desperate attempt to window dress their earnings.   
  2.  GM has recently realized that they have fallen behind on the growing trends of electric engines and autonomous vehicles. The commentary that GM provided for Detroit news suggests that the restructuring will largely involve switching from traditional to electric engine manufacturing.
  3. GM’s quotes from Detroit news seem to indicate that management is very confident in their current financial situation. They feel it is best to restructure during this period of consistent growth than it would be to have to restructure in a time of urgency. [1]

[1] https://www.detroitnews.com/story/business/autos/general-motors/2018/11/25/general-motors-planning-oshawa-ontario-plant-closure/38606867/

[2]https://www.spratings.com/documents/20184/5670590/Industry+Top+Trends+2019+-+Autos/348e03e6-ea84-06a0-8a56-50db063ae3f5

[3] https://www.marketwatch.com/story/gm-raises-profit-guidance-for-2018-2019-01-11-91034142

Attached below is a related article you may enjoy!

Leave a Reply

%d bloggers like this: