Catching back up
In its first round of layoffs since 2010, General Motors announced this week that 2,000 jobs will be shed between two plants in Ohio and Michigan.
The layoffs come in the face of the slumping small-car market, with the two affected locations responsible for producing the Cadillac ATS, Cadillac CTS, Chevrolet Camaro, and the Chevrolet Cruze.
Days Supply, a key metric for determining the ability of the market to meet demand, for each of those vehicles was nearly double the industry benchmark for what’s considered an appropriate amount of inventory to have on hand. Each plant will still continue to operate to produce the same cars as they do now, but with fewer employees and shifts to do so, to allow demand to catch up to supply.
What the market wants
The market has preferred GM’s offerings of SUVs, pickups, and crossover vehicles this year, with gasoline prices remaining low. Additionally, GM cut back on sales of the Cruze to rental car companies, which generated a lower revenue margin for the company.
This has led to sales of the Cruze being down nearly 20%, according to GM spokesman Tom Wickham, while the sales of the other three vehicles are down between 8%-16% overall this year.
Timing is everything
Although such an announcement might be seen to have been delayed until after Election Day, GM spokesman Tom Wickham, speaking to CNN, stated that the company didn’t announce this planned round of layoffs prior to the election because it did not want to be accused of attempting to influence the election results, and that the timing was related instead to providing the affected employees the 60-day closure notice that they are required to under the Worker Adjustment and Retraining Notification Act (WARN Act).
The WARN Act is a federal law that requires employers with more than 100 employees to provide at least 60 day notification of plant closures, along with assistance to workers in providing for additional training and job interview assistance.
Investing in other regions
On the heels of the notification that the company was shedding 2,000 jobs, GM also announced that the company was looking to invest more than $900 million in infrastructure additions to other plants across the nation, with a $211 million investment at Lansing Grand River, $667.6 million for future products at Toledo Transmission, and $37 million at Bedford Casting Operations.
The result of these additional investments would allow the company to retain over 775 jobs which would otherwise be cut, according to the company.
In addition to these investments, GM has also confirmed their commitment to investing over $5 billion in their Mexican auto plants over the next six years, despite the recent changes in the US political climate.