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Money News

Why GM is Laying Off Thousands of Workers

November 26, 2018

1 min read

General Motors, the largest automaker in the U.S., announced a massive restructuring that will include closing at least three assembly plants and laying off thousands of workers. The company will also trim its car lineup, shutting or slowing down production on vehicles with declining sales.

It’s the biggest reorganization undertaken by the car giant since its bankruptcy 10 years ago, according to reports.

“We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions,” GM CEO Mary Barra said in a conference call.

GM produces and sells cars under four brand names in the U.S.: Chevrolet, Cadillac, Buick, and GMC.

Here’s what you need to know:

What’s behind GM’s decision?

GM is hoping to become leaner and more profitable after restructuring and could save up to $6 billion by 2020, according to a company press release.

The company’s decision to stop production on some sedans is likely to cut costs as it pulls in revenue from SUVs, and pickup trucks, which have seen an increase in sales in recent years. Between January and September 2018, passenger car sales decreased by 13.2%, while truck and SUV sales increased 8.3%.

Other factors–including tariffs on steel and aluminum, which may have cost GM as much as $1 billion thus far–may have also prompted the change.

GM is reportedly looking to shift to electric, self-driving vehicles in the future.

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By Sam Becker
Sam Becker is Stash's financial writer.

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