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GM Falls Behind Ford, Fiat on Domestic Employment


Aug. 30 2019, Published 11:00 a.m. ET

General Motors (GM) has fallen to third place on UAW (United American Workers) employment, according to Bloomberg. GM was the largest UAW employer 40 years back, reports Bloomberg, but now Ford Motors (F) and Fiat Chrysler Automobiles (FCAU) occupy the top two slots. Bloomberg suggests that because GM’s operations have shrunk domestically and grown overseas, its domestic employment has fallen.

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GM’s restructuring plan drove job cuts

Last year, GM announced its restructuring program to optimize its capex and reduce employee costs. The company said it had invested $6.6 billion and maintained or created 17,600 US jobs in the past four years, and was refocusing on SUV, truck, and crossover production.

However, as market conditions had changed and car demand had fallen, the company decided to allocate production of new models to fewer plants. It announced that five US plants (three assemblies and two propulsions) would be unallocated this year. It announced it was ceasing production in Gunsan, Korea, and two other plants outside North America.

The company forecast saving about $6 billion by 2020 through the restructuring program. GM chairman and CEO Mary Barra said, “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

But GM intends to create more jobs in the US

Though the company is reducing headcounts broadly to restructure, it plans to create more US jobs. In May, GM announced it plans to create 450 new EV (electric vehicle) assembly jobs in three Ohio cities. In the next two years, the company intends to double its resources in the autonomous car and EV space. GM has also announced 1,000 new jobs at its Flint assembly plant, 400 at its Orion assembly plant, and 400 at its Bowling Green assembly plant.

Barra said, “The US economy and our core business are strong, so we can expand our commitment to U.S. manufacturing and Ohio and create job opportunities for our employees.” She added, “We also expect to bring more jobs to the US over time.”

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GM’s restructuring plan yielding results

This year, GM has saved about $1.1 billion in costs. Its new launches and cost-savings program are building optimism. GM expects its heavy-duty pickup sales to be strong in the second half of the year.

In the second quarter, the company sold approximately 1.9 million vehicles, of which 876,000 were sold in North America. The company’s revenue of $36 billion surpassed analysts’ estimate by 0.23%, and its EPS of $1.64 beat their estimate by 14.25%.

Since GM’s earnings release on August 1, its stock has fallen by 8.5%. However, year-to-date, GM stock has risen by 10.3%. Ford, Ferrari (RACE), and Tesla (TSLA) have fallen by 4.3%, 1.8%, and 8.2%, respectively, this month. Fiat has fallen the least, by 1.0%.

Layoffs in the auto industry

As auto companies focus on profits, growth, and new-era vehicles, their traditional operations are slowing down. GM’s domestic operations have also been reduced by the lucrative opportunities available worldwide. Moreover, automakers’ focus on EVs and autonomous cars has led to a demand for technologically advanced assembly lines.

Massive layoffs by auto companies have hit not only the US but also Mexico, China, and India. Ford plans to cut 10% of its salaried workforce, or about 7,000 employees, of which 800 would be in North America. Plus, Ford plans to close or sell six European assembly plants in Europe, cutting about 12,000 jobs. Fiat is expected to lay off about 1,500 employees at its Windsor assembly plant, and Tesla rival Nio (NIO) is planning to cut about 1,200 jobs.

Going forward, auto companies could cut additional jobs as more activities are performed by computers. Recently, CNBC reported that Tesla CEO Elon Musk said, “AI will make jobs kind of pointless.” CNBC also noted that the World Economic Forum expects millions of jobs to be lost by 2022.


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