We translated GM’s “staffing transformation” press release into plain English

In a jargon-filled pressed release[1], General Motors today (Nov. 26) announced it is laying off 15% of its salaried workers and unallocating—err, closing—five plants in the US and Canada.

As CNN puts it, the automaker “is reinvesting money away from cars that once dominated America’s roadways and putting it into technology it believes will power its future.”

Or, as GM put it, it’s going to “strengthen its core business, capitalize on the future of personal mobility and drive significant cost efficiencies.”

The rest of the press release was similarly euphemistic. For clarity’s sake, we’ve made some edits to it.

General Motors is firing 15% of its salaried workers Accelerates Transformation 

DETROIT – General Motors (NYSE: GM) will close five North American plants and lay off 15% of its salaried employees. accelerate its transformation for the future, building on the comprehensive strategy it laid out in 2015 to strengthen its core business, capitalize on the future of personal mobility and drive significant cost efficiencies. The company hopes this announcement will be drowned out by Cyber Monday sales and completely forgotten by Christmas.

Today, GM is continuing to take proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce. These actions are expected to increase annual adjusted automotive free add $6 billion to annual cash flow by the end of 2020on a run-rate basis.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable will lower our costs, while giving us the flexibility to invest in the future,” said GM Chairman and CEO Mary Barra. “We recognize the need to change course after people stopped buying so many of our cars stay in front of changing market conditions and customer preferences to position our company for long-term success.”

Contributing to the cash savings of GM’s actions will save approximately $6 billion, including are cost reductions of $4.5 billion and a lower capital expenditure annual run rate of an almost $1.5 billion decrease in yearly capital spending. The actions include:

Transforming product development – GM is evolving its global product development workforce and processes to drive world-class levels of engineering in advanced technologies, and making too many products that not enough people want and not getting the good stuff out quickly enough. and to improve quality and speed to market. Resources allocated to electric and autonomous vehicle programs will double in the next two years. Additional actions include:

  • Increasing high-quality component sharing across the portfolio, especially those not visible and perceptible to customers.
  • Expanding the use of virtual tools to lower development time and costs.
  • Integrating its vehicle and propulsion engineering teams.
  • CompressingShrinking its global product development campuses.

Optimizing Shrinking the product portfolio – GM has recently invested in newer, highly efficient vehicle architectures, especially in trucks, crossovers and SUVs. GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized shrinks, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade.

Increasing capacity utilization Growing what works – In the past four years, GM has refocused capital and resources to support the growth of its crossovers, SUVs and trucks, adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs. Though we would never admit that we believe people are going to stop buying cars one day, we’re preparing for a staggering drop-off. As such, With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to made at fewer plants next year.

Assembly plants that will be shut downunallocated in 2019 include:

  • Oshawa Assembly in Oshawa, Ontario, Canada
  • Detroit-Hamtramck Assembly in Detroit
  • Lordstown Assembly in Warren, Ohio

Propulsion plants that will be shut downunallocated in 2019 include:

  • Baltimore Operations in White Marsh
  • Maryland.Warren Transmission
  • Operations in Warren, Michigan

In addition to the previously announced closure of the assembly plant in Gunsan, Korea, GM will cease the operations of shut down two additional plants outside North America by the end of 2019.

These manufacturing actions are expected to significantly increase capacity utilization. To further enhance business performance, GM will continue working to improve other manufacturing costs, productivity and the competitiveness of wages and benefits.

Layoffs Staffing transformation– The company is transforming shrinking its global workforce to cut costs ensure it has the right skill sets for today and the future, while driving efficiencies through the utilization of best-in-class tools. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making bloating the bureaucracy.

Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.” The company lost $3.7 billion in 2017.

GM expects to fund the restructuring costs through a new credit facility.that will further improve the company’s strong liquidity position and enhance its financial flexibility.

GM expects to record pre-tax charges of $3.0 billion to $3.8 billion related to these actions, including up to $1.8 billion of non-cash accelerated asset write-downs and pension charges, and up to $2.0 billion of employee-related and other cash-based expenses. The majority of these charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes. The majority of these charges will be incurred in the fourth quarter of 2018 and first quarter of 2019, with some additional costs incurred through the remainder of 2019. GM did not expect to be overtaken by Tesla as the US’s most valuable car company last year. Hopefully, these lay offs will keep GM on top.

References

  1. ^ jargon-filled pressed release (media.gm.com)

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