General Motors to close plants, cut staff by 15%, faces criticism from Donald Trump

The automaker said it will close two assembly plants in the US and one in Canada, along with two others in as-yet-unidentified countries.

Image Courtesy: Reuters

Washington: General Motors on Monday announced the closure of seven of its factories around the world as part of a restructuring plan.

The automaker said in a statement that it will close two assembly plants in the US and one in Canada, along with two others in as-yet-unidentified countries.

The firm added that it will also close two production plants in the US, reports Efe news.

The five North American plants affected by the move are the assembly plants in Detroit-Hamtramck and Lordstown, Ohio, as well as the one on Oshawa, Ontario, and the two engine and transmission production plants in Baltimore, Maryland, and Warren, Ohio, all of which employ some 14,500 people.

GM did not say in its statement how many workers will lose their jobs, but it emphasised that it is taking measures to reduce its payroll by 15 percent, including cutting its white-collar executives by 25 percent to facilitate decision-making.

The firm`s statement read in part: "Today, GM is continuing to take proactive steps to improve overall business performance including the reorganisation of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce."

"These actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis," the statement said.

In addition to these plants, GM said that at the end of 2019 it will cease production at two other plants located outside North America, providing no further details but saying that it will do so in the very near future.

The closures come after the company announced it was shutting down its assembly plant in Gunsan, South Korea.

CEO Mary Barra told reporters that the firm is making the cuts "to get in front of it while the company is strong and while the economy is strong," although the firm said it was not anticipating an economic downturn.

She added that the move is part of GM`s plan to become a more agile, resilient and profitable company while giving it the flexibility it needs to invest in the future.

Barra also said that the firm recognises the need to stay ahead of changing market conditions and consumer preferences so that GM can be successful over the long term.

President Donald Trump has blasted GM for making plans to close seven production plants, including four in the US, and demanded that the firm find a vehicle that sells in sufficient quantities to be able to increase the company`s activities in Ohio, a key US election battleground.

In remarks to reporters at the White House, Trump said that he had spoken with GM President and CEO Barra after learning earlier on Monday of the firm`s decision to shut down seven assembly and production plants, a move that will directly affect some 14,500 workers in the US and Canada. 

"I was very tough. I spoke with her when I heard they were closing and I said, you know, this country has done a lot for General Motors," Trump said, in a reference to the federal bailout of the firm after the 2008 financial crash, adding that "the United States saved General Motors, and for her to take that company out of Ohio is not good". 

The President was referring to the Lordstown assembly plant in Warren, Ohio, one of the four facilities that GM plans to close in the US, along with two others in Michigan and one in Maryland.