GM Cuts 14,700 Jobs As Auto Bubble Begins To Burst

On Monday, General Motors announced that it will cut 14,700 jobs or 15% of its North American workforce in addition to closing three assembly plants and two other facilities:

In the most far-reaching shake-up since the company emerged from bankruptcy more than eight years ago, General Motors will shutter three North American assembly plants and two other facilities, while also eliminating 15 percent of its salaried and salaried contract workforce, moves that together will cost an estimated 14,700 jobs.

The cuts are part of a plan to adapt to changing market demands favoring SUVs over sedans and coupes, while also shifting focus to the electrified and self-driving vehicles GM sees as central to the industry’s future.

“We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success”, said GM Chairman and Chief Executive Officer Mary Barra, who outlined her new plan during a conference call Monday morning.

About 5,600 jobs will be lost at the three assembly plants set to close by the end of 2019. That includes 1,500 at the Detroit-Hamtramck facility that currently produces the Chevrolet Volt plug-in hybrid, as well as the Chevrolet Impala, Cadillac CT6 and Buick LaCrosse sedan.

While GM’s CEO Mary Barra is spinning this move as a positive, I am highly suspicious because it is taking place at the same time that global auto sales are plunging:

GM’s layoffs and plant closures don’t come as a surprise to me because I wrote a Forbes piece in March 2017 in which I criticized President Trump’s excitement and boasts about Ford’s announcement that it was going to invest in three Michigan plants, which would create jobs:

The reason why I criticized President Trump’s excitement about Ford’s decision was because I’ve been warning (then and now) that the U.S. automobile sales boom was driven by a debt bubble that would end very badly. As I wrote in Forbes piece:


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