General Motors Company (GM) is planning a major overhaul of its operations and this involves closing several facilities and cutting jobs. The company will stop production at five of its North American locations, including one in Canada, and reduce its headcount by 15%, including executives.
GM believes the strategy will help generate cost savings of $6 billion over the next two years and will also save time and effort in its operations at a time when the carmaker is facing heavy costs due to the new tariffs.
As part of its global restructuring, GM has decided to close one of its plants in Ontario, Canada, and the company reportedly does not have any vehicle production assigned at this facility beyond 2019. Workers are said to have walked out in protest after hearing this news.
Over the past few years, GM has been focusing more on profitable areas and slowly offloading certain portions of its business. The sale of its Opel and Vauxhall businesses to PSA Group was part of this strategy.
GM is said to be planning changes to its product line as customer preferences shift more towards SUVs and away from sedans. The company is seeing a slowdown in sales even in large markets like China and it believes it is no longer viable to have a large number of facilities producing low-demand vehicles.
Several of GM’s peers like Ford (F) have decided to stop the production of some of their models which are no longer as popular as they used to be. GM is also increasing its investments in autonomous and electric vehicles. The company is planning on moving resources away from traditional cars and more towards these new technological developments.
Most of the major car companies have invested in self-driving vehicles and they face competition not only from each other but also from leading technology companies like Alphabet (GOOGL). GM plans to invest $1 billion in its self-driving vehicle division Cruise this year.
As of 2:30 pm ET, GM’s stock was up 5.6%.