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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.

GM profit dips on truck changeover, but beats estimates

DETROIT — General Motors on Thursday reported a higher-than-expected quarterly profit despite a drop in production of high-margin pickup trucks, as it gears up for new models that are expected to boost profits next year. Like rivals Ford and Fiat Chrysler Automobiles, GM is banking on highly-profitable Chevy Silverado and GMC Sierra pickup trucks to lift profits, as consumers shift away from traditional passenger cars in favor of these larger, more comfortable trucks, SUVs and crossovers. During the first quarter, the process of changing over to GM's new pickups resulted in a drop in production of 47,000 units. GM Chief Financial Officer Chuck Stevens said the production drop had resulted in a drop in pre-tax profit of up to $800 million. Earlier this year, GM said its 2018 profits would be flat compared with 2017, but expected its all-new pickup trucks would boost margins starting in 2019. On Thursday, GM reiterated its full-year 2018 forecast for adjusted earnings in a range from $6.30 to $6.60 per share. The automaker said capital expenditures were more than $500 million higher in the quarter because of investments its new pickup trucks and a family of low-cost vehicles under development with Chinese partner SAIC Motor Corp. On Wednesday, rival Ford said it would stop investing in most traditional passenger sedans in North America. CFO Stevens told reporters on Thursday that GM has "already indicated that we will make significantly lower investments on a go-forward basis" in sedans. 2019 GMC Sierra View 21 Photos GM benefited from a lower effective tax rate in the quarter, but adjusted pre-tax margin fell to 7.2 percent from 9.5 percent a year earlier. Stevens said the company's profit margin should hit 10 percent or higher in the second quarter and for the full year. GM said material costs were $700 million higher in the first quarter, and it expects those costs to continue rising. The automaker said it would counter those increases with cost cutting measures. "It is a more difficult environment than it was three or four months ago," Stevens said when asked about rising commodity prices from potential steel and aluminum tariffs announced by the Trump administration. "But we are confident we can continue to offset that." The company reported quarterly net income of $1.05 billion or $1.43 per share, a drop of nearly 60 percent from $2.61 billion or $1.75 per share a year earlier. Analysts had on average expected earnings per share of $1.24.

GMC unveiling 2021 Yukon, Yukon XL on January 14

UPDATE: We received a reply back from a representative at GMC confirming that the new Yukon will be revealed on January 14. The text has been updated to reflect this. General Motors is renewing its body-on-frame SUVs, and GMC's Yukon is next in line to receive a full makeover. It's scheduled to break cover on January 14 alongside the long-wheelbase Yukon XL. It's reasonable to assume we would have gotten our first glimpse at the next Yukon during the 2020 Detroit Auto Show had the event not moved to June. The new date is too close to the model's on-sale date, so GMC will unveil it during a standalone event held in Vail, Colorado, according to GM Authority. We reached out to GMC, and a representative confirmed that is indeed the reveal date for the full-size SUV. Spy shots suggest stylists took GMC's two biggest SUVs in a sharper, bolder direction. Both models share the same front end, which borrows styling cues like C-shaped headlights from the Sierra pickup. Brand-specific rear lights help the Yukon models stand out from their Chevrolet-badged siblings, the Tahoe and the Suburban, which hasn't always been the case. The standard Yukon and the Yukon XL will each grow in size, though there's no indication GMC's naming structure will change to reflect that; Yukon XXL admittedly doesn't have much of a ring to it. While we haven't seen the interior yet, we expect it's getting a generous serving of technology, including a new, touchscreen-based infotainment system. The larger exterior dimensions will clear up more space for people and gear, so average-sized adults will be able to fit in the third-row seats. The range-topping Denali variants of both models will return to satisfy those who crave sumptuousness. The sheet metal will hide much of the same hardware found under the Tahoe/Suburban duo, including an independent rear suspension added in the name of comfort and handling. Powertrain specifications should carry over, too, meaning the entry-level engine will be a 5.3-liter V8 rated at 355 horsepower and 383 pound-feet of torque. The list of options will include a 6.2-liter V8 with 420 horsepower on tap, and we're betting the straight-six turbodiesel available on the Bowtie-badged SUVs will also be offered at an extra cost. Rear-wheel drive and a 10-speed automatic transmission will come standard, and buyers will be able to pay extra for four-wheel drive. The next GMC Yukon and Yukon XL will go on sale halfway through 2020 as 2021 models.