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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.

Daily Driver: 2015 GMC Canyon

Daily Driver videos are micro-reviews of vehicles in the Autoblog press fleet, featuring impressions from the staffers that drive them every day. Today's Daily Driver features the 2015 GMC Canyon, reviewed by Seyth Miersma. You can watch the video above or read a transcript below. Watch more Autoblog videos at /videos. VIDEO TRANSCRIPT [00:00:00] Hey, guys. This is Seyth with Autoblog, and I'm here in the 2015 GMC Canyon pickup truck. The version I'm in is about as bare bones as this truck gets. We've got a convenience group package, which means I have things like a remote lock and unlock. I've got a spray-in bed liner and then I've got the very tiny but still useful infotainment system, which allows for things like hooking up your phone, [00:00:30] Bluetooth streaming music from my iPhone to the sound system, things of that nature. Really there's not a whole lot here. What you see is what you get. The interior is pretty basic. We've got gray plastic. We've got black plastic. We've got these gray cloth seats which I actually kind of dig. They've got a cool shape. It's comfortable in terms of the interior but it's certainly not fancy at all. You go back and look into the segment and you look at offerings from Nissan and Toyota and you'll see that this really feels pretty [00:01:00] plush certainly compared to their base level trucks. We've got the 2.5-liter 4-cylinder in it. Still makes 200 horsepower and 191 pound feet of torque. It doesn't feel completely slow but I'll admit that some of that has to do with the fact that I have a six-speed to play around with. I'm revving it up a little bit higher than you normally would with a pickup truck. It's not fast. It doesn't mean that it's not a little bit fun to drive. [00:01:30] We've come so far in terms of overall ride quality, noise vibration and harshness and things of that nature in all pickup trucks that it's frankly surprising to see something at the very bottom end in terms of price of the market be as good as this is. I think that you're going to get a lot of people who are into the truck lifestyle who like the look. You're going to get a lot of people who are moving down from bigger trucks that still want to have a little bit of capability. Then with things with a truck of this nature where you're talking about a [00:02:00] sub-$25,000 price point, you're just going to get a lot of people who want a vehicle of any kind, kind of a budget vehicle.

GM profits threatened by glut of pickups

Automotive News reports that General Motors may slash production or ramp up discounts in order to deal with an oversupply of pickup trucks. GM currently has more than double the standard supply of pickups, and the vehicles are threatening to dampen the automaker's profits for 2013. Typically, automakers try to sustain a 60- to 75-day supply of vehicles, but GM is currently loaded with a 139-day supply, as of last month. At the end of November, the automaker was sitting on 245,853 units.
The manufacturer says that it will adjust production accordingly before laying any incentives on the profitable pickups. Even so, there's some concern that the inventory swell could hurt the roll-out of the next-generation Chevrolet Silverado and GMC Sierra. GM actually began slowly stepping back production in August, but it's clear the company will take further action as it heads toward the end of the year and into the next. Analysts predict the automaker could reduce pickup manufacturing by nearly half in the first quarter of 2013.
That still may not be enough to keep GM from laying extra cash on the Silverado and GMC Sierra. While the company's incentive spending was down in November compared to the same month in 2011, both the Ram 1500 and Ford F-150 saw double-digit percentage increases in sales last month while the Silverado and Sierra numbers slid compared to a year prior. Incentive spending could help move more trucks and add some balance to the GM inventory surge.