It’s been a pretty rough ride for the auto industry this year, and the road has become even bumpier for one of the world’s top carmakers.
General Motors recently announced that it’s planning to halt operations in five North American plants—including four in the United States—putting more than 14,000 jobs on the line.
The move impacts factories in Ohio and Maryland as well as two plants in Michigan and one in the Canadian province of Ontario.
All told, 3,300 production line workers in America will lose their jobs, as well as 2,500 in Canada. GM is also angling to let go of 8,000 salaried workers from the plants. Together, the mass layoffs make up more than 10% of the company’s entire North American workforce, which totals roughly 124,000.
No one particular problem spurred the sweeping cuts from GM, though the automaker has struggled on several financial fronts this year.
Changing tastes are also partially to blame, with GM betting big on small cars earlier in this production cycle, but a more recent drop in gas prices are sending buyers back toward the old standbys of pickup trucks and SUVs.
The glut of issues resulted in a 13% year-over-year drop for GM in 2018’s second quarter, and a downgraded estimation in the company’s overall stock value.
Chief executive officer Mary Barra said that the move was simply a pragmatic financial choice, meant to help the company stay light-footed in a fast-changing market.
Indeed, GM spun the layoffs as part of a greater corporate “transformation” in its official announcement, with the workforce reduction—along with several other tweaks—intended to generate a “free cash flow” of $6 billion by the end of 2020.
And the plan may already be working. News of the impending layoffs secured a vote of confidence from Wall Street investors, which sent GM’s stock price up by 4.8%—the company’s highest closing price in the past three months—in the wake of the announcement.
Still, others met the plan with an air of defiance. The United Auto Workers union, which represents employees at GM’s American plants, called the move “callus” and said it would “not go unchallenged.”
Union representatives are expected to meet with GM executives next year for labor contract renegotiations, which could possibly result in some jobs being spared.