The American dream is as painstaking of journey as it is rewarding, built on centuries of immigration and sanguineness for a better life. Head for the promised land, people would say, where the streets are paved with opportunity and if you work hard enough, one day you’ll be driving a real American-made car, forged from steel, built only for opportunists and people willing to go the distance. The General Motors Company (GM) was founded in 1908 to design and manufacture durable, quality automobiles for American consumers. After decades of innovation and unparalleled quality that spawned household brands like Buick, Cadillac, Chevrolet, and GMC, General Motors (GM) announced plans for a major restructuring of its global businesses.
Under the auspices of GM (GM) CEO Mary Barra, who rescued the company from Chapter 11-related issues several years ago, the automotive brand no longer believes their old mantra that “a car for every purse and purpose” will suffice any longer. In an effort to restructure the company, Barra announced on Monday that General Motors will halt production at five of its North American plants, effectively cutting more than 14,000 jobs, roughly 8,100 white collar positions and 6,000, or so, factory jobs, according to CNBC.
Naturally, the United Automobile Workers Union was not incredibly pleased with the news that thousands of their members will soon be jobless:
“This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce.”
–Terry Dittes, Vice President, United Automobile Workers
Notwithstanding the difficulty and financial hardship facing 14,000 people as a result of General Motors’ decision, the U.S. automaker is coming to terms with the fact that rash decisions like these are necessary this day and age. It is crucial for any company to stay ahead of changing market conditions in order to preserve the sanctity of the company for long-term growth and sometimes, as unfortunate as it may be for some, businesses have to lay off employees. Mary Barra recognized the difficulty of GM’s (GM) recent announcement and explained, in a statement, that “the actions we [GM] are taking today continue our transformation to be highly agile, resilient, and profitable while giving us the flexibility to invest in the future.”
According to CNN, Barra informed the media that she made the decision to halt production and lay off employees “when times were good,” which made Wall Street quite happy, resulting in GM’s (GM) shares enjoying a 5% boost on Monday, trading at $37.04 per share.
Looking into the future for General Motors (GM), and the automotive industry in general, for that matter, we can take a cue from GM’s new motto, “Zero Crashes, Zero Emissions, Zero Congestion,” to gauge how automakers plan on moving forward. Car buyers are losing interest in sedans and smaller vehicles and the auto industry is taking notice. Earlier this year, Ford Motor Company (F) announced that they will no longer be investing in the next generation of sedans for North America.
“Over the next few years, the Ford (F) Car portfolio in North America will transition to two vehicles — the best-selling Mustang and the all-new Focus Active crossover coming out next year. The company is also exploring new ‘white space’ vehicle salutes that combine the best attributes of cars and utilities, such as higher ride height, space, and versatility.”
–Ford Quarterly Financial Report April 2018
Following suit, General Motors (GM) announced that, in addition to their massive layoffs and closing of production facilities, they will end production of the Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Cruze, Chevrolet Impala, and Chevrolet Volt, given that, on average, the six sedans are down 14% in sales, as of September. Interestingly enough, the Chevy Volt, one of the more popular hybrid vehicle offerings from the last few years, is being discontinued by GM (GM), likely because consumers are shifting their attention to all-electric vehicles, rather than vehicles that partially run on gas.
General Motors (GM) is doing it all can to beat rival automakers to market in terms of who will mass-produce the perfect vehicle of the future first. Some industry experts believe the future of automotive transportation might have absolutely nothing to do with the style of the body of the vehicle, but rather technology developed to eliminate the need for a vehicle operator. Companies like Alphabet (GOOGL), Apple (AAPL), and Tesla (TSLA) are burning down the road with no driver in the seat of their vehicles, hoping that autonomous vehicles will catch on in the not too distant future.
Catching on to this trend, General Motors (GM) will utilize its 2016 acquisition of Cruise Automation, a deal which cost the automaker “north of $1 billion”, to try its luck at building mass-production self-driving vehicles. General Motors (GM) is deeply rooted in the history of American innovation and, though the loss of thousands of jobs is daunting and upsetting for many, I believe that the company, founded to create for the American people, will rise once more.
