The Strategist

GM to lay off 15% of staff in North America

11/27/2018 - 10:27

The largest US automaker General Motors Co. (GM) is planning to reduce the number of employees in North America by 15%, including reducing the number of managers by 25%, the company said in a press release.

Given the current number of GM employees in the region, the layoffs will affect more than 10 thousand people.

The company also plans to close four plants in the United States and one in Canada by the end of 2019 if management and trade unions fail to agree on an increase in the workload of these enterprises. Precisely, they mean a plant for assembly of sedans in Detroit, a plant for production of small cars in Ohio and a plant in the Canadian city of Oshawa near Toronto. Two transmission factories can also be closed - in the suburbs of Detroit and in Baltimore.

In addition, the firm may close two more plants outside North America.

These measures will lead to a one-time write-off of assets in the amount of up to $ 3.8 billion, which will be reflected in the financial statements for the current quarter and for the first quarter of the next year.

At the same time, the expected increase in GM's free cash flow by the end of 2020 will amount to $ 6 billion, including a cut in operating costs of $ 4.5 billion. This will allow the company to double its investment in the development of electric cars and self-driving cars within two years.

Shares of General Motors jumped in price by 5.8%, to a maximum since July. Since the beginning of the year, the company's capitalization has decreased by 7.3%, to $ 50.7 billion.