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This is one of the most drastic cuts 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 itself on Monday.
According to the company, this measure will involve some 8,000 managers and some 6,000 workers in factories. 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 Canadian plants in Oshawa (Ontario) and American plants in Detroit-Hamtramck (Michigan) and Warren (Ohio).
Propulsion and transmission systems plants in Baltimore (Maryland) and Warren (Michigan) will also be out of service.
The announcement was well received by the markets, where the company's shares rose 6%. However, aroused the ire of US President Donald Trump, who recommended GM to close factories in China and open them in Ohio.
https://twitter.com/realDonaldTrump/status/1067494680416407552
"Very disappointed with General Motors and su Mary Barra, Executive Director, for plant closures in Ohio, Michigan and Maryland. They do not close anything in Mexico and China. The United States saved General Motors andas it is the THANKS we receive! We seek to reduce all subsidies to GM"
However, the auto company estimates that these measures will save about $ 6,000 million by the end of 2020.
Paradoxically, society does not go through a bad financial moment – like in the midst of a financial crisis a decade ago he had to cut 47,000 jobs and receive government badistance do not go bankrupt.
At the present time, despite a slight decline in the number of units sold in the last year in the North American market, the last balance presented last month has seen an increase in revenues.
In fact, this element has angered the unions who accuse the company of making a "crazy decision" that places "economic gains compared 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 to rise globally, most of this increase comes from emerging countries and less from traditional markets such as the United States, Western Europe and the United States. Japan.
"Vehicle sales slow down in North America and fall in China and these are the most important markets for GM, "said Michele Krebs, executive badyst at Autotrader, one of the largest online car sales companies in the United States, in conversation with BBC Mundo.
The expert also pointed out that interest rates should continue to rise in the United States over the next year. Consumers will therefore have to pay higher fees to finance their purchases, which will affect sales.
"We already know that when prices go up, sales go down," says Krebs.
2. Commercial War
The so-called "trade war" between the United States and China and, in particular, the increase in steel and aluminum import tariffs agreed by the US government can have a significant impact on the cost of vehicles.
"The Price War of President Donald Trump can account for most of the $ 1 billion increase in costs recorded this year", badysis Antony Currie in a note to Reuters.
Krebs, for its part, points out that the increase in these tariffs will affect both the price of cars imported from China and those manufactured in North America.
The expert also pointed out that the uncertainty surrounding the outlook for foreign trade not only affected GM but also the rest of the car manufacturers.
3. The fall of the sedan
The GM announced cuts imply the end of North American manufacturing of six vehicle models. These 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 loses interest to US consumers.
"There has been a dramatic change in consumer preferences that they are moving away from traditional cars and now prefer light off-road vehicles. GM is adapting its factories to this new situation. In recent months, the percentage of new vehicles sold that were traditional sedans was less than 30% for the first time in history and is expected to continue to decline, "says Krebs.
The badyst says that this phenomenon affects all car manufacturers.
4. Future bet
But the decision of General Motors not only has to do with the difficulties of the present, but also, according to the company, with a commitment for the future.
The company the production of trucks, electric cars and self-driving vehicles is a priorityONOMa.
"The actions we are taking continue our transformation to become a very agile, resilient and profitable company, while leaving us the opportunity to invest in the future," said the company's executive director, Mary, on Monday. Barra. the taken procedures.
Executive plans to double by 2020 the company's resources for electric and autonomous vehicles.
"Reducing costs by $ 6 billion gives GM more fuel to cope with future problems and to try to win the competition for electric and autonomous cars," said Antony Currie.
The badyst points out that the American company is already leading the race to develop the car of the future because it plans to launch commercial operation of driverless taxis in at least one city in the United States.
5. A bold direction
Some experts believe that Mary Barra herself is one of the fundamental factors behind this radical decision by GM.
"A car for every pocket and every goal" was the motto that guided General Motors for decades and allowed it to become the largest car company in the world.
However, Barra – the first woman to run a car business – reversed this strategy to focus efforts and resources on the most profitable models.
"Mary Barra is pushing GM into the 21st century by deliberately transforming almost every aspect of its operations in the US and its global operations, bringing the company to be more flexible, agile and efficient," said Rebecca Lindland, senior badyst at Kelley Blue Book, a company specializing in the automotive market, at CNBC.
His room is not safe though.
"I believe that GM runs great risks putting so much effort and resources on electric and autonomous vehicles because we do not know when your 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 points out that China is the largest electric vehicle market in the world and will continue to grow thanks to government regulation.
"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 preparing," he said.
It remains to be seen whether these measures of General Motors end up functioning as a leap into the future or into the void.
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