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5 reasons why GM is cutting jobs, closing plants in a healthy economy

DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation. It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles. GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles. The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession. The company also said it will stop operating two additional factories outside North America by the end of next year. The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries. Here's a rundown of the reasons behind the cuts: Coding, not combustion CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines. "The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company." Shedding sedans The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors. "We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote. The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off.

Recharge Wrap-up: U of M wins Solar Challenge, family attempts record-breaking e-bike ride

The University of Michigan Solar Car Team has won the 2014 American Solar Challenge. It is the team's eighth national championship, its fifth in a row, and its first using Siemens' product lifecycle management (PLM) software. The race took place over 1,722 miles and seven days traveling across eight states. The team's car, called "Quantum," outpaced the nearest competitor by four hours. Looking forward, Michigan Solar Car Project Manager Pavan Naik says, "The switch to Siemens tools will give us the ability to model and simulate everything and truly allow us to optimize the performance of our new vehicle. As we start on our quest to win the World Solar Challenge in 2015, we'll be leveraging a full complement of PLM solutions." Read more in the press release below. The EcoCar3 competition, in which teams will convert Chevrolet Camaros into hybrid electric cars, begins in September. The various college teams will have four years to lessen the car's environmental impact as much as possible while maintaining performance and, of course, that cool Camaro design. EcoCar3, which is put on by the US Department of Energy and General Motors, kicks off with a workshop in Novi, Michigan from September 16 - 18. Read more at the DOE website at the dedicated EcoCar3 site or watch the announcement video at our previous post. Zap and Jonway Auto are shifting to a high rate of EV production. Zap already has two lines creating the Urbee EV to met demand, and is switching over a third to make electric minivans and SUVs. The company aims to produce 30,000 EVs by 2015 for the Chinese market. Zap says it has a backlog of 25,000 Urbee orders. Read more in the press release below. A family of four hopes to make a world record-breaking, 6,000-mile electric bike journey this fall. The family, which recently drove from Argentina to Montana in a pickup with a camper, will ride from Montana to Maine, then down the East Coast to Florida in an attempt to break the record for longest electric bicycle ride. They'll use two bikes. The Father, Thomas, will ride one of the bikes carrying one of the children, while the rest of the family rides in a support vehicle, with the mother, Dylan, riding the second bike when they can find others to drive. They have started a crowdfunding campaign for some of the equipment needed to document the trip. See the video below or read more at Treehugger.

Deep discounts — $12K, $13K, $16K — are fueling a pickup price war

Heavy discounts of up to $16,000 per vehicle are fueling a "truck war" among full-size pickups sold in the United States by the Detroit Three, a Reuters analysis shows. Strong U.S. sales this year of the highly profitable big trucks have helped offset lagging passenger car sales. But it is not clear how much of the truck demand is linked directly to ample factory incentives and dealer discounts, or how far sales might decline without those subsidies. A Reuters survey of Ford, General Motors Co's Chevrolet and Fiat Chrysler Automobiles's Ram truck dealers across the United States indicates stores are offering deep discounts the country's bestselling full-size pickup trucks. "The walls are not crashing down on full-size trucks," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions in Chester Springs, Pennsylvania. Detroit-based automakers want to keep cranking out their high-margin trucks, he added, and "giving up a little of the profit is the cheapest way to do it." Stores are offering discounts of up to $12,000 on the 2018 Ford F-150, which remains the best-selling vehicle in the country, recording more than 80,000 sales in May. Discounts run up to $13,000 on the 2018 Chevrolet Silverado and as high as $16,000 on the Ram 1500. Average transaction prices for full-size pick-ups range from around $42,000 to $45,000, industry analysts and automakers say. All three companies are spending furiously - GM and Fiat Chrysler to help sell off carryover 2018 trucks to prepare for redesigned 2019 models, and Ford to sustain its long-held sales crown. A supplier fire that temporarily shut down production of the F-150 last month "changed the game," said Jeff Schuster, senior vice president of forecasting at LMC Automotive in Troy, Michigan said. The supply halt nudged Ford's crosstown rivals "to ratchet up incentives on the current models to go after weakness at Ford," he said. Deals advertised on the companies' official websites range from rebates and low-interest loans to ultra-cheap lease rates, but they are not telling the whole story. Ford, for instance, advertises a $2,000 rebate and a $500 financing credit on sales of certain F-150 models. But James Collins Ford in Louisville, Kentucky, is offering discounts of up to $12,215 on the 2018 F-150 XLT SuperCrew 4x4. The price cuts are even steeper at a number of GM and Fiat Chrysler dealers. Quirk Chevrolet is selling the 2018 Silverado 1500 Double Cab at $13,000 off sticker.