General Motors spikes after announcing plans to idle 3 North American factories and slash 15% of its salaried workforce (GM)

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  • General Motors on Monday announced plans to halt productions at three factories in North America and to close two propulsion-component plants in the US.
  • The company also said it will reduce the size of its global workforce by 15%, including a 25% cut in white-collar staff.
  • The moves are intended to shift resources to investing in electric and autonomous vehicles and to prepare for a downturn in the auto market, the automaker said.
  • Watch General Motors trade live.

General Motors rallied as much as 8% Monday after announcing plans to stop producing vehicles at three factories in North America and to cut its salaried employees by 15% next year.

GM said its Oshawa Assembly plant in Oshawa, Ontario, its Detroit-Hamtramck Assembly plant in Detroit, and its Lordstown Assembly plant in Warren, Ohio, would be “unallocated” by the end of 2019 as it reorganized its manufacturing capacity to focus on electric and self-driving cars and in anticipation of a downturn in the auto market.

Additionally, the automaker said that it would shut down its propulsion-component plants in Maryland and Michigan, and idle two additional, unnamed assembly plants outside the US. GM will also reduce the size of its total workforce by 15%, including a 25% cut in its white-collar staff.

All these actions are expected to increase GM’s annual adjusted automotive free cash flow by $6 billion on a run-rate basis by year-end 2020, according to the company.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” CEO Mary Barra said in the press release.

“We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

The news wasn’t entirely surprising. GM curtailed manufacturing operations in South Korea earlier this year, and the idling of the Oshawa plant had been widely reported in the Canadian press as under discussion. It also exited the European market in 2017 by selling its Opel-Vauxhall division to Peugeot; ceased manufacturing of vehicles in Australia; and has been aggressively investing in autonomous vehicles through its Cruise division — through which it intends to launch 20 new electrified vehicles by 2023.

“We started this transformation in 2015,” Barra said in a conference call with reporters to announce the moves, “Now we’re accelerating and picking up the pace.”

General Motors was down 9% this year.

Matthew DeBord contributed to the story.

 

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