Why Barra Listening to Trump Would Spell Disaster for GM

Why Barra Listening to Trump Would Spell Disaster for GM

GM said it would phase out certain models of slower-selling cars, halting production at four factories in the United States and one in Canada.

Trump added: "I said 'I heard you're closing your plant, '" he recalled from his conversation with Barra.

The announcement is the biggest restructuring in North America for the US's largest automaker since its bankruptcy a decade ago.

USA consumer preferences have shifted away from passenger cars to larger, more comfortable SUVs and pickup trucks has been swift and severe, leaving vehicle makers scrambling to readjust.

Sedans have gone from more than half of US sales as recently as 2012 to just about 30 per cent of the market this year.

GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors.

The largest USA automaker said on Monday it would cut thousands from its North American workforce, slash production and eliminate some slow-selling auto models.

General Motors' decision to halt production in two states that were key to Donald Trump's 2016 victory could complicate the president's re-election bid.

These are the six cars that GM's range is dropping due to poor - and worsening - sales.

"You may find additional announcements coming on that topic".

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GM on Monday announced it will close five factories in North America and lay off almost 15,000 workers.

By the end of 2020, GM is projecting a freed-up cashflow of $US6 billion ($A8.31 billion), along with $U4.5 billion ($A6.24 billion) in cost reductions and a $US1.5 billion ($A2.08 billion) lower capital expenditure.

Kristin Dziczek of the Center for Automotive Research in MI argued it would be short-sighted for the federal government to target GM's electric cars for punishment, since those are expected to play a growing role in the industry's future.

Barra told reporters the company is making the cuts "to get in front of it while the company is strong and while the economy is strong". The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1bn.

Many of those who will lose jobs are now working on conventional cars with internal combustion engines. "It's nothing exclusive to GM", said Jeremy Acevedo, manager of industry analysis at Edmunds. GM said the moves are created to prepare the company for a future of driverless and electric vehicles. That's how GM can meet demand for trucks and SUVs while raising the possibility of closing auto factories.

GM confirmed on Tuesday that 2,250 salaried workers had applied for buyouts. Earlier this year Ford also announced plans to eliminate thousands of jobs, NBC reported. It's not clear precisely what, or when, action may be taken. The company flagged one-time charges of up to $3.8 billion for the fourth quarter of this year and first quarter of 2019.

The shift by U.S. consumer preferences have been away from passenger cars to larger, more comfortable SUVs and pick-up trucks has been swift and severe, leaving automakers scrambling to readjust. Barra is also shifting resources toward building electric cars and, eventually, vehicles that drive themselves.

The United Automobile Workers (UAW) union vowed to "confront this decision by GM through every legal, contractual and collective bargaining avenue open to our membership". LaCrosse and Volt production will end March 1, while CT6 and Impala production would stop June 1.

He said there's a "lot of pressure on them" and that he's pushing for GM to bring new products to OH, whose Lordstown plant is one of five scheduled to close in North America.

GM will stop production at the following three plants: Lordstown, Ohio; Hamtramck, Michigan; and Oshawa, Ontario.

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