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GM faces multiple battles over its planned restructuring

General Motors Company (GM) announced on Monday that it was closing several of its facilities in North America and eliminating thousands of positions. The company also announced that it would stop selling six of its car models, including the Impala and Cadillac XTS in the US.

As soon as GM disclosed its plans, all hell broke loose. Workers at one of the company’s Canadian plants reportedly walked out in protest over the news while employees in the US are dismayed. Workers’ unions said they would look at every possible alternative to find recourse.

President Trump is furious, and that’s not surprising because GM’s current plan goes against his promise of bringing manufacturing jobs back to the US. Trump said he would cut all subsidies to GM, including those for electric cars, although the details on these subsidies are unclear.

GM, however, has its share of challenges which is why the company is resorting to this restructuring. The company is dealing with declining demand and slow sales for sedans, and that’s the main reason it is looking to focus more on trucks and SUVs. It is important for a company to prioritize its strengths in order to drive growth.

GM is doing exactly this by opting to boost the production of SUVs and trucks which in turn is likely to open up job opportunities going forward. There are options for the affected workers to move to other GM facilities, where additional labor might be required to deal with increased production. GM is also transforming itself to enter a new world – one that has electric cars and self-driving vehicles.

General Motors takes hard decisions on restructuring and job cuts

GM is said to be struggling with higher costs due to the tariffs, even though the company has not specifically cited them as a reason. The high commodity costs have affected the automobile industry in general. A point to note would be that subsidies and taxes alone will not work, they need proper planning and execution.

GM has invested significantly in the US over the past few years but the current restructuring is necessary for the company to grow and succeed in the long term. GM is not the only one, in fact, the entire auto industry is undergoing significant changes and these changes will come with both tough decisions as well as growth opportunities.

GM’s shares have dropped 10% so far this year. As of 2:30 pm ET, the stock was up 0.11%.

 

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