GM to close 5 factories, including Hamtramck and Warren
Two Michigan auto factories will halt production in 2019.
General Motors announced Monday morning that the Detroit-Hamtramck assembly plant and Warren transmission operations plant will cease production in 2019, as well as plants in Ontario, Ohio, and Maryland.
The plants currently build cars that won't be sold in the U.S. after next year, including the Chevrolet Volt, Buick LaCrosse, Cadillac CT6, Chevrolet Cruz compact, and Chevrolet Impala.
Listen to Stateside's interview with auto industry analyst Daniel Howes above.
The move comes amid slowing car sales for the auto company. Increasingly, Americans are buying crossovers, SUVS, and pickups, but not cars. Ford wants to stop making almost all of its cars by 2020. Now it's GM's turn.
A total of 14,700 factory and white-collar workers will be laid off as a result of the closures. 1,542 of those cuts will be at the Hamtramck plant; 335 will be from the Warren transmission plant.
Karen Majewski is mayor of Hamtramck. She says a lot of residents are going to be bitter about it. GM used eminent domain to tear down the city's historic Poletown neighborhood in 1980. Now, it may leave a shuttered plant in its place.
"With the closing of this plant," she says, "that really is the end of automotive production in the city of Hamtramck and that means something to us psychically, because we're a city built on the auto industry."
In a press release, GM Chairman and CEO Mary Barra said, "The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future. We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success."
She added, "These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle."
To investors, the announcement comes as good news. GM's stock soared after the announcement.
Investors know the Trump administration's steel tariffs are already reducing GM profits by more than a billion dollars. They know GM is big in China, where car sales are dropping sharply.
Stockholders want to know the company is preparing for the downturn.
Michelle Krebs is an analyst with Auto Trader. She says it's clear GM is no longer interested in world domination. It's interested in survival, growth, and profits.
"The automakers have learned from the Great Recession, and that memory is still like it was yesterday, and so they are not going to get in to a situation where they find themselves nearly bankrupt as they did approaching the Great Recession," says Krebs.
GM says it will release more details about the restructuring at the start of next year, just months before it begins negotations with the United Auto Workers on its next four year contract. The cuts announced today will likely make that negotiation even thornier.
Detroit Mayor Mike Duggan released a statement in reaction to the cuts:
"This morning I spoke to Mary Barra and she advised me for the first time of the situation at the Detroit-Hamtramck Assembly Plant. The news is troubling. I have spoken to UAW President Gary Jones and the city's economic development team. They are working together to come up with a solution that works for GM and the employees. We all know there is strong demand for manufacturing space in Detroit and we are willing to work with GM to fill all the available manufacturing space at Poletown with either GM-related entities or other companies."
Congresswoman Debbie Dingell (D-12) also released a statement:
"This is a warning and we all must be concerned about protecting jobs and keeping them in this country. I care deeply about working families hearing this news right now. If we want our auto industry to continue to be the global leader in transforming mobility, federal policy must ensure we keep them at the forefront of innovation and technology. Congress must work together on bipartisan policies that keep manufacturing jobs in this country, develops clean energy, and supports infrastructure to transform our mobility future.”
This post was updated November 26 at 5:00 p.m.