Categories Other Industries, U.S. Markets News

GM to begin production cut this week with closure of Ohio plant

The restructuring program kicked off by General Motors (GM) recently has reached a crucial phase, with the company doing preparations to end production at the first of the five plants identified for closure in North America.

Several months after the announcement, the massive production facility at Ohio will come to a grinding halt this week. The last of the popular Chevrolet Cruze sedan, being manufactured in America, will leave the assembly line Wednesday. However, Cruze will continue to roll out from manufacturing facilities in Mexico.

The last of the popular Chevrolet Cruze, manufactured in America, will leave the assembly line Wednesday

Meanwhile, the plant closure has sparked protests and a prominent trade union has sought action against the company for allegedly not adhering to the norms. The agitation assumes significance considering the displeasure expressed by President Donald Trump over the plant closure. Last year, Trump had demanded that the Ohio plant be kept open.

Reports say that GM workers who have been transferred to alternative facilities, due to the production cut, are struggling to cope with the unexpected development, which has forced many to travel to far-away locations leaving behind their families.

Related: GM reports strong Q4 earnings

The auto giant announced the extensive reorganization last year, involving capacity reduction and downsizing, to stay relevant in the rapidly-changing global automotive industry. Some of the popular car brands of GM will disappear from the market when it scales down production in response to the changing customer taste. Conventional passenger cars continue to lose market share to trucks, SUVs and electric/autonomous vehicles.

In an indication that the restructuring is a transitory affair, the management recently revealed plans to boost operation in Brazil spending $2.73 billion in the next four years, in addition to a multi-billion dollar investment that is already in the pipeline, to be completed over the next ten years.

Interestingly, GM’s shares were not affected so much as the company’s business did in recent months. The stock made a quick recovery after slipping to a two-year low mid-208 but remained volatile. It gained 17% so far this year even as the reorganisation gathered momentum.

 

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

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