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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.

Fiat Chrysler recalls 1.6M vehicles to fix Takata airbags

DETROIT — Fiat Chrysler is recalling more than 1.6 million vehicles worldwide to replace Takata front passenger airbag inflators that can be dangerous. Takata inflators can explode with too much force, hurling shrapnel into drivers and passengers. At least 23 people have died from the problem worldwide and hundreds injured. The recall covers the 2010 through 2016 Jeep Wrangler SUV, the 2010 Ram 3500 pickup and 4500/5500 Chassis Cab trucks, the 2010 and 2011 Dodge Dakota pickup, the 2010 through 2014 Dodge Challenger muscle car, the 2011 through 2015 Dodge Charger sedan, and the 2010 through 2015 Chrysler 300 sedan. It's part of the largest series of automotive recalls in U.S. history. About 10 million inflators are being recalled this year. Already Ford, Honda and Toyota have issued recalls in the latest round. Fiat Chrysler owners will be notified by letter and dealers will replace the inflators with safe ones. The company says it's not aware of any injuries in vehicles involved in this recall, but says it has plenty of replacement parts and is urging people to get the repairs done. "Recall service is free, we have replacement parts and dealers are ready to help," Mark Chernoby, FCA's head of safety for North America, said in a statement. The recall includes 1.4 million vehicles in the United States. Takata used the chemical ammonium nitrate to create a small explosion to inflate the airbags. But the chemical can deteriorate over time due to high humidity and cycles from hot temperatures to cold. The most dangerous inflators are in areas of the South along the Gulf of Mexico that have high humidity. The Fiat-Chrysler recall is part of a phased-in replacement of Takata inflators being managed by the National Highway Traffic Safety Administration. Owners can check to see if their vehicles have been recalled by going to airbagrecall.com and keying in license plate or vehicle identification numbers. More than three years after the U.S. National Highway Traffic Safety Administration took over management of recalls involving Takata inflators, one third of the recalled inflators have not been replaced, according to an annual report last year from the government and a court-appointed monitor. The report said 16.7 million faulty inflators out of 50 million under recall have yet to be fixed. Safety advocates say the completion rate should be far higher given the danger associated with the inflators.

To grease the skids for Stellantis, PSA offers to boost Toyota's fortunes

BRUSSELS/MILAN — Peugeot maker PSA has offered to boost Japanese rival Toyota to try to address EU antitrust concerns about its plan to create the world's fourth-biggest carmaker, to be called Stellantis, by merging with Fiat Chrysler, people familiar with the matter said on Friday. PSA has offered to increase the production capacity for Toyota in their van joint venture, one of the sources said. Another source said the French company would sell the vans at close to cost. PSA makes vans for Toyota in its Sevelnord plant in northern France. The van collaboration started in 2012. PSA submitted its offer to the European Commission earlier on Friday, three months after the EU enforcer opened a full-scale investigation into the deal with FCA on concerns that it would hurt competition in small vans in 14 EU countries and Britain. "As of now, the transaction has obtained merger clearance in 14 jurisdictions. As previously stated, closing of the transaction is expected to occur in the first quarter of 2021," PSA and FCA said in a joint statement. The Commission, which temporarily halted its investigation into the deal in July while waiting for the companies to provide requested data, did not set a deadline for its decision. "The deadline is still suspended. This procedure in merger investigations is activated if the parties fail to provide, in a timely fashion, an important piece of information that the Commission has requested from them," the EU executive said. It is now expected to seek feedback from customers and rivals before deciding whether to demand more concessions, or either clear or block the deal. Government/Legal Chrysler Fiat Peugeot Stellantis