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Spotlight: General Motors take turnaround moves to fit into future U.S. manufacturing industry
From:Xinhua  |  2019-02-08 17:46

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NEW YORK, Feb. 8 (Xinhua) -- As U.S. automaker General Motors (GM) is carrying forward its massive layoff plan, economists believe that such moves indicate the company's long-term strategy of restructuring, in a bid to advance itself in the U.S. manufacturing industry.

"I think what those moves illustrate are just the reality of what manufacturing in the U.S. economy is likely to be now and in the long term," Brian Schaitkin, a senior economist of the Conference Board, a New York City-based business membership and research association, told Xinhua.

"In general, automakers are confronting an environment where it's unclear how quickly autonomous vehicles made that, how much consumer demand there may be for electric vehicles and what exactly the future is for a gas-powered, small car, which seems to have less and less of a market," he said.


The U.S. automobile manufacturer is in the midst of cutting 4,000 salaried workers, which started on Monday, as part of a 15-percent reduction in white collar jobs in North America that GM announced in November 2018.

The company also unveiled plans to shut down four plants in the United States and one in Canada, as bold steps for the company's transformation efforts.

"I think from the perspective of GM, these lay-offs are very much of a long-term strategy of restructuring, trying to figure out what the future of the auto industry is going to look like, and therefore, what kind of talent and staffing levels they want at different plants and facilities around the country," said Schaitkin.

The moves have already taken some effect, as the company reported on Wednesday stronger-than-expected earnings results for the fourth quarter and the full year of 2018, which the company attributed to tighter controls on cost and higher truck sales amid "a highly volatile environment."

"Results were driven by strong pricing, surging crossover sales, successful execution of the company's full-size truck launch, growth of GM Financial earnings and disciplined cost control," the company said in a statement.

"We will continue to make bold decisions to lead the transformation of this industry and drive significant shareholder value," GM CEO Mary Barra said Wednesday.

GM announced in last November that the U.S. workers impacted by the layoff actions will have the opportunity to shift to other GM plants to support growth in trucks, crossovers and SUVs.

"GM's transformation also includes adding technical and engineering jobs to support the future of mobility, such as new jobs in electrification and autonomous vehicles, " the company said.

As bold turnaround moves, Schaitkin held that the layoffs and plant closure intended to make GM better equipped, so as to be competitive at the auto industry and to explore deeper consumer demand trends over the next decade.

"What GM is doing through its layoffs is trying to restructure in such a way that'll be better prepared for changes that it believes are coming to the auto industry," he noted.

GM is not the only one in the United States in terms of recent layoff moves. Another U.S. automobile manufacturing giant -- Ford -- has recently announced it would slash an estimated 24,000, or 12 percent of its 202,000 workers for restructuring.

Statistics show that at least 12,000 U.S. jobs were moved overseas or were in the process of leaving the country in four months after U.S. President Donald Trump took office in January 2017, The Atlantic quoted a study of Department of Labor data by the website ThinkProgress as saying.


Frederick Cannon, executive vice president of U.S. investment banking firm Keefe, Bruyette & Woods, held that those moves speak more to the fact that it is difficult to reverse the long-term trend of moving manufacturing jobs out of the United States.

"The manufacturing is a global business and every country in the world has a role in that business. When you try to upset it for non-economic reasons, oftentimes it doesn't work out," Cannon told Xinhua.

As some U.S. multinational companies have decided to cut employees and move or set up factories overseas for the sake of future development, China has become a preferential choice.

In this regard, GM has prioritized China for long-term growth, saying it will launch its all-new global family of vehicles first in China, followed by South America and Mexico in its 2019 forecast report.

"GM China will remain agile in responding to shifting market dynamics, as it launches more than 20 all-new or refreshed vehicles in 2019," said the company.

Those new products include compact cars and crossovers from GM's new global vehicle family, and new-energy vehicles.

"I think it's quite clear that there are going to be more and more Chinese consumers...for any auto company," said Schaitkin. "I think GM definitely believes that China is an important future market."

"It's going to be very interesting to see how consumer preference in China ends up developing and how major American producers end up deciding to locate production facilities and also to think about what kinds of vehicles to produce," the economist said.

(Wang Qiang in Chicago also contributed to the report.)