GM CEO announces thousands of job cuts, factory closures & more


#1

What are your thoughts?

Why GM CEO Mary Barra killed Chevrolet cars, approved likely plant closures

USA Today Article - GM closing factories and laying off workers


Trump proposes adding the "Chicken Tax" on all imports
#2

I’m not sure why everyone is up in arms over this. Granted, people losing jobs is not good, and I’m not happy to see that happen, but that’s part of the business cycle. This can happen to anyone at any time.

Every company owner wants to maximize revenue and be as profitable as they can be…especially a public company who has shareholders to answer to. If Mother Barra feels this is the way to make her company more profitable and shareholders happy, so be it. I’d argue that most would do the same if they were put in that same scenario.

I get the rub that “Government Motors” got bailed out by Uncle Sam, but that’s 10 years ago now. Does the government want to do another handout because GM decided to lose money they didn’t have to lose on cars that aren’t selling, or potentially losing GM altogether if they fold?

There’s always the possibility she’s doing the wrong thing, gas spikes to 8/gal and people dump SUVs like the plague, and then there aren’t any cars to sell. That said, it’s a calculated risk, and risks are taken each and every day in corporate America.


#3

The really interesting part of this story is that GM is laying off 25% of their executives. This is the start of a real downsizing for the General.


#4

In a nutshell, because of the devastating impact it has on the selected community and region. And the devastating impact it has on affected peoples lives.

I’m not a fan of Michael Moore but his old movie “Roger and Me” gives you an feel for the impact these things have.


#5

It’s a cycle. When the growth stops, and they have to squeeze out profits for shareholders, they have to cut costs.

It sounds like GM is actually doing the right thing - cutting middle management, cutting ICE sedans (and one hybrid), and focusing on autonomous, electric vehicles.


#6

I totally understand the devastation…I mean there are parts of Detroit that are completely abandoned because of the auto industry pulling out/changing/evolving/dissolving…whatever word you want to use. I got gas one time while passing through Detroit on the way to Windsor. There were bars and chains on the windows of the Sunoco + graffiti everywhere. Put 5 bucks in and paid the premium for gas in the 51st state.

That said…it’s still a business, and not a charity. Those factories also haven’t been officially closed yet…just unallocated. It’s quite possible (yet not guaranteed) during the upcoming UAW renegotiation, product is reallocated to these factories.


#7

It would cushion the blow a little bit if the current administration offered tax incentives to the states most impacted by these closures - to advance growing industries. It is always going to be difficult to replace well-paying, unionized manufacturing jobs but it’s a far better tactic than claiming to ‘bring jobs back’ when technological advancements mean those jobs simply don’t exist anymore or aren’t required. It’s not likely to happen though with our current admin.

GM, like Ford and I’m sure others will follow are just responding to market changes. The real skill is trying to ensure states have a diversity of jobs to make it easier to respond to market contractions.


#8

Shouldn’t the state governments be luring these diverse jobs in vs relying on the Feds?


#9

In an ideal world absolutely! - It woud’ve been a far better result if Amazon’s HQ2 were to head to Columbus rather than New York but ¯_(ツ)_/¯


#10

What’s a GM?

The reality is other than trucks and SUVs, GM doesn’t really exist anymore. Who buys Chevy cars other than rental car companies and police departments? Nobody, that’s who. Yes this will be hard for the areas affected, but from a business standpoint this is absolutely the right thing to do.

And blaming Trump or unions or whatever is really irrelevant. Come to think of it, if anyone is to be blamed it’s Obama for propping up this dying dinosaur for 10 years with the bailout in 2009. GM should have been left to go bankrupt back then and come out of it a leaner company making products consumers actually want.


#11

I’m not sure you fully grasp what would have happened if GM and Chrysler failed. It would have been devastating for Michigan and probably pushed the state close to bankruptcy. The PBGC would have been on the hook for billions, unemployment insurance fund would have paid out hundred of millions and I could go on. In the end bailing out GM probably didn’t cost that much less than letting them go bankrupt.

But as you note, GM didn’t really recover from bankruptcy or come out much leaner. So in the end the long term benefits of bailing them out are largely non existent.

As for blaming Trump, he had nothing to due with this. But…GM got 500 million tax cut due to Trump’s corporate tax policy, did a huge stock buyback and then laid off thousands of workers. What was the point of the deficit busting tax cut?


#12

I think GM has too many brands and models. In my opinion GMC and Buick are both surplus to the market requirements. Streamlining the brands and reducing the number of models sold by the remaining brands would be the right direction. Toyota/Lexus really has the blueprint for the right business model. Rwd platforms for luxury cars/SUVs for Cadillac and fwd platforms for the budget Chevy cars and SUVs. Up the truck game also by offering higher end versions under Cadillac brand name. This way product development can be more focused and would require fewer headcount.


#13

Buick does well in China. It will probably outlive all other GM brands.


#14

You do realize they are the #1 manufacturer of cars in the US, and are neck and neck with Toyota, Nissan and VW wordwide, correct?

G Dubbs actually proposed it, but his term was ending. Obama went through with it because it would’ve been a nationwide disaster if he didn’t.


#15

As @max_g noted, Buick is dominant in China. GMC is basically a cash cow as they’re rebadged Chevys with a different interior. I can’t see either of these going away. Cadillac is the one that’s in danger.


#16

Not sure if union workers are still well paid, last I heard, the wages are much lower than before. I remembered touring the Oshawa plant when I was a engineering student in the 80’s, that place was massive. But even back then most of my friends that had internship at GM did not go back, it had a reputation that you won’t learn much working there which is not where a new grad should be. Letting GM go bankrupt does not necessary mean they will do the right thing, some company have multiple bankruptcies and some shuts down eventually.


#17

The tariffs on steel have cost GM over $1 billion. More expensive steel = lower profit margins (which could help explain why the Cruze was axed). Trump certainly played a role in this and voters in Michigan and Ohio that are now losing their jobs have him to thank


#18

As Goes Janesville is a great documentary that follows Janesville, WI after their GM plant closes 12/23/08. Very sad, but it shows the impact these plants have on the community


#19

GM’s stock price is where it was in 2011, while the broader stock market is up 100% in that same time. I guess that’s due to tariffs as well huh?

You’re right about voters though. That’s why Obama bailed out GM, for votes. It was vote buying using tax payers dollars, to prop up a dinosaur of a company that needed to die long ago.


#20

Obama was already in office…Bush approved the deal.

https://www.newyorker.com/news/john-cassidy/an-inconvenient-truth-it-was-george-w-bush-who-bailed-out-the-automakers