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This is one of the most drastic reductions in the history of the auto industry in the United States: General Motors will cut some 14,000 jobs in the United States. and Canada and the closure of five of its production plants in those countries.
This was announced by GM himself on Monday.
According to the company, the measure will affect about 8,000 executives and about 6,000. plants. A substantial reduction of the company's 54,000 employees in North America.
The badembly plants that will no longer receive orders in 2019 are the Canadian plant in Oshawa, Ontario and the American plants in Detroit-Hamtramck, Michigan. Warren, Ohio.
Propulsion and transmission systems plants in Baltimore (Maryland) and Warren (Michigan) will also be out of service.
This announcement was well received by the markets, where the company's shares rose 6%. However, prompted the ire of US President Donald Trump who recommended GM to close factories in China and open them in Ohio.
Very disappointed with General Motors and its general manager, Mary Barra, closing factories in Ohio, Michigan and Maryland. Nothing is closed in Mexico and China. The United States saved General Motors, and it's the THANKS we get! We are now considering removing all subsidies @GM including ….
– Donald J. Trump (@ realDonaldTrump) November 27, 2018
" Very disappointed with General Motors and s u Executive Director, Mary Barra, for the closure of factories in Ohio, Michigan and Maryland stop nothing in Mexico and China The United States saved General Motors and as are the THANKS we received! We plan to remove all Grants Granted to GM "
But the auto company estimates that through these measures, it will save about $ 6,000 million by the end of 2020.
Paradoxically, the l & # 39; business does not go through a bad financial period, as in the midst of the financial crisis of . ] ten years ago, he had to cut 47,000 jobs and benefit from the help of the government to avoid bankruptcy.
At present, despite a slight decline in the number of units sold during the last fiscal year in the North American market. , your last balance resigned last month, his income increased
. This element has actually angered the unions who accuse society of making a "senseless decision" that places "economic gains relative to working families". "
BBC Mundo explains five factors that led to this drastic reduction
1. A declining market
Although the number of vehicles sold continues its upward trend on a global scale, this increase comes largely from emerging countries and less traditional markets such as the United States, Western Europe and Japan.
" Vehicle sales slow in North America and decline in China and these are the biggest markets for GM, "says Michele Krebs, executive badyst at Autotrader, one of the car sales companies.American conversation with BBC Mundo, the largest online in the US
The expert also points out that interest rates should continue to rise in the United States over the next year, so that consumers will have to finance their purchases, which in turn will i impact on sales
"We already know that when prices go up, sales fall," says Krebs.
2. Commercial War
The so-called "trade war" between the United States and China and, in particular, the increase in steel and import tariffs. aluminum agreed by the US government can have a significant impact on the cost of vehicles. [19659004] "President Donald Trump's Price War could explain much of the $ 1 billion cost increase this year ," badyst Antony Currie said in a Reuters note .
Krebs also notes that the increase in these duties will affect both the price of cars imported from China and those manufactured in North America.
The expert also points out that uncertainty about the outlook for foreign trade affects not only GM, but also the rest of the automakers.
3. The fall of the sedan
The reductions announced by GM imply the end of the manufacturing in North America of six models of vehicles. They are:
- Buick LaCross
- Cadillac CT6
- Chevrolet Impala
- Chevrolet Cruze
- Cadillac XTS
- Chevrolet Volt
What do these cars have in common? All are sedan models, a product that is losing interest among US consumers.
"Consumer preferences have evolved considerably away from traditional cars and now prefer light off-road vehicles .] GM is adapting its plants to this new situation. the percentage of new vehicles sold that were traditional sedans was less than 30% for the first time in its history and should continue to decline, "says Krebs.
The badyst badures that this phenomenon affects all car manufacturers.
4. Betting on the future
But the decision of General Motors is not only related to the difficulties of the present, but also, she says, to a bet on the future.
The company gave priority to production. trucks, electric cars and driving vehicles onom to .
"The actions we take continue to transform into a very agile, resilient and profitable business, while providing the flexibility to invest in the future," said the executive director of the company. company, Mary Barra, explaining the measures taken.
The executive plans to double by 2020 the resources allocated to the company Electric Vehicles and Autonomous .
"A $ 6 billion cost reduction gives GM more fuel to deal with future problems and to try to win electric and autonomous cars," said Antony Currie.
The badyst notes that the US company is already leading the race for the development of the car of the future, next year plans to launch the commercial operation of the taxi without driver in at least a country. City of the United States
5. Bold leadership
Some experts believe that Mary Barra herself is one of the fundamental factors behind this radical decision made by GM.
"A car for every pocket and every goal" was the motto that has been for decades. guided General Motors and allowed it to become the largest automotive company in the world
However, Barra – the first woman to run a car business – turned this strategy to focus efforts and resources in the most profitable models .
"Mary Barra is pushing GM into the 21st century by deliberately turning almost every aspect of its operations in the US and into its global operations, leading the company to become more agile, agile and efficient," said Rebecca Lindland, Analyst at Kelley Blue Book, a company specializing in the automotive market, CNBC.
Your decision is not without risk, however.
"I think GM is taking a big risk by investing so much effort and resources in electric and autonomous vehicles because we do not know when their sales will take off and generate profits. Electric cars account for less than 2% of the US market, "Krebs told BBC Mundo.
The expert however emphasizes that China is the largest electric vehicle market in the world and will continue to grow thanks to government provisions.
"This is an important market for GM and they want to be leaders, and at the same time we do not know what kind of products the company is likely to prepare," he says.
It remains to be seen whether these measures of General Motors end up functioning as a leap into the future or in a vacuum.
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