The massive job cuts announced by General Motors have been the talk of the financial media since they were announced on Monday. Not only did the news trigger a buying frenzy of GM stock among trading desks, it also quickly made its way to the factory floors at places like Northeast Ohio, as workers found themselves trying to assess the coming impact of the decision.
The termination of 1,600 workers and the shuttering of Cruze production at GM’s Lordstown plant has already resulted in profound aftershocks. The WSJ highlighted several such stories, like Sylvester Townsend, whose company makes front and rear bumpers for the ill-fated car in nearby Youngstown. He stated that he may need to lay off all of his 32 production workers as a result of the GM decision.
“It blew me away. It’s going to be devastating,” he said.
The mayor of Lordstown has anticipated that the cuts are going to cost $1 million in annual tax revenue, which is about 25% of the town’s total budget. He is holding onto the slim hope that the plant may reopen at some point.
Mayor Arno Hill stated: “They didn’t say they were permanently shuttering the plant. So we figure that we still have a heartbeat.” And, as Trump’s latest tweets confirm, the president is doing everything in his power to make sure the mayor’s hopes come true. Until then, however, the Lordstown shut down is part of a larger cost-cutting initiative by General Motors to shed its slower-selling and lower-margin product lines.
Among other things, GM announced on Monday that it plans to end production at additional assembly plants in Michigan and in Canada, which could contribute to up to 6,700 total factory workers being laid off. The company also was planning to cut another 8,100 salaried workers in North America, many of whom are working currently in product development. GM is planning to use the billions in cost savings to help it navigate further into electric and autonomous vehicles. The company also announced it would stop producing the Chevrolet Volt hybrid, the Cadillac CT6 and the Buick LaCrosse.