Why GM is Laying Off Thousands of Workers

General Motors, the largest automaker in the U.S., announced a massive restructuring that will include closing at least three assembly plants and laying off thousands of workers. The company will also trim its car lineup, shutting or slowing down production on vehicles with declining sales.

It’s the biggest reorganization undertaken by the car giant since its bankruptcy 10 years ago, according to reports.

“We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions,” GM CEO Mary Barra said in a conference call.

GM produces and sells cars under four brand names in the U.S.: Chevrolet, Cadillac, Buick, and GMC.

Here’s what you need to know:

• GM will lay off 15% of its salaried workforce, which includes around 8,000 workers, and possibly 6,000 hourly jobs. In October 2018, the company offered to buy out 18,000 workers. GM has 180,000 workers worldwide.
• At the end of 2019, assembly facilities in Maryland, Michigan, and Ohio will be “unallocated”–meaning that they could reopen in the future, but will most likely be shuttered. GM will also close plants in Canada and South Korea.
• Although GM didn’t specify which models it will discontinue, the list likely includes the Chevy Cruze, Buick LaCrosse, and the Cadillac CT6, which haven’t been selling well.
• Earlier this year, GM’s chief domestic rival, Ford, made a similar decision to stop producing most cars, to focus on SUV and pickup truck production.

What’s behind GM’s decision?

GM is hoping to become leaner and more profitable after restructuring and could save up to $6 billion by 2020, according to a company press release.

The company’s decision to stop production on some sedans is likely to cut costs as it pulls in revenue from SUVs, and pickup trucks, which have seen an increase in sales in recent years. Between January and September 2018, passenger car sales decreased by 13.2%, while truck and SUV sales increased 8.3%.

Other factors–including tariffs on steel and aluminum, which may have cost GM as much as $1 billion thus far–may have also prompted the change.

GM is reportedly looking to shift to electric, self-driving vehicles in the future.

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