GM Closes Assembly Plants, Shifts Focus from Cars to Technology
General Motors (GM) announced today that the company will be completely restructuring their global business strategy by closing 8 assembly plants worldwide and shifting focus to futuristic technologies. Five of the plants which will be closing are in North America. Fifteen percent of GM’s salaried workforce is being cut including 25% of top executive positions. These changes are expected to save the company $6 billion by the end of 2020.
In the short term, this announcement is seen as a major blow to workers who will be out of a job by the end of 2019. It will also be a blow to an American-born industry which GM has been a cornerstone of for generations. In the long term, however, GM seems to be positioning itself to react to changing market conditions such as consumer preferences and the need for improved technology.
According to Mary Barra, CEO of GM, General Motors “recognizes the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.” The popularity of sedans is waning with consumers, though anticipation is high for self-driving vehicles and cars with other state-of-the-art technologies.
GM threw its hat in the self-driving car ring with its acquisition of Cruise in March 2016. Cruise is a driverless car company which is headquartered in San Francisco, CA. It’s competing to be the first company in Silicon Valley to successfully make and market a self-driving vehicle to American consumers. Top contenders for the company to make self-driving cars a reality for the public include companies like Google, Apple, and Tesla. GM has announced that it will spend $1 billion on Cruise in the upcoming year to build the car of the future.
Some speculate that rising costs associated with tariffs on imported steel and aluminum have contributed to GM’s decision to close many of its American plants. Commodity costs for GM have risen by $300 million in Q3 of 2018 and are anticipated to raise costs by $1 billion next year. Closing plants and reducing their headcount will work to counter-balance changing consumer tastes and higher commodity prices.
General Motors has a new motto to go along with its change in corporate strategy, “Zero Crashes, Zero Emissions, Zero Congestion.” This new slogan incorporates three of the top concerns drivers have when they weigh the decision to purchase a car. Automation technology and green technology will help to cut down on these negative side effects.
The question remains whether GM’s closure of 8 assembly plants worldwide to put a renewed focus on developing technology will make or break a company steeped in history. If their bid to be one of the first companies to go-to-market with their own self-driving car or a car with zero emissions, the dramatic switch in focus could skyrocket GM’s sales. However, the company walks a fine line between preparing for the future and turning away an American public which has long since regarded GM as a traditional car company.