General Motors is axing more than 14,000 jobs and closing factories amid growing fears of an economic slowdown and trade war.
America’s biggest car maker said the move was in response to changing customer tastes, with SUVs and pick-up trucks favoured over sedans that once ruled the country’s roads.
The move provoked an immediate rebuke from President Donald Trump, who warned GM it was ‘messing with the wrong person’ – and demanded the car maker shut factories in China instead.
Fears: America’s biggest car maker said the move was in response to changing customer tastes
While boss Mary Barra insisted the firm is positive about the future, the plan will send a chill through markets, given Cadillac and Chevrolet maker GM’s traditional role as a bellwether for the US economy.
The company has been hit hard by steel tariffs after President Trump vowed to take on China. And analysts are likely to view the decision as a sign America’s boom is running out of steam.
Barra said the 110-year-old car maker would prepare for the future by doubling investment into developing self-driving and electric vehicles.
She said: ‘This industry is changing very rapidly, when you look at propulsion, autonomous driving and ride sharing.
‘We want to be in front of it while the company is strong – and the economy is strong.’
But Trump told the Wall Street Journal: ‘They better damn well open a new plant very quickly.’
Adding that he had spoken to Barra on Sunday night, he said: ‘I told them, ‘You’re playing around with the wrong person.’ ‘
Drama of a different kind was unfolding on the other side of the Pacific, with Japanese car maker Mitsubishi confirming it had removed Carlos Ghosn as chairman. It followed his arrest and ousting from Nissan over alleged financial misconduct.
GM, which employs around 180,000 staff, yesterday said it would slash 8,000 salaried jobs and another 6,000 part-time ones.
The Detroit-based firm said it is shutting assembly plants in Ohio, Michigan and Ontario in Canada. It will also stop building models assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse. Other plants making components are at risk of closure as well, along with two factories outside North America.
Gloom: General Motors Mary Barra insisted the firm is positive about the future
Overall GM said the shake-up would lead to cost savings of around £4.7 billion by 2020.
Other car makers have also tried to trim costs. The industry has suffered falling sales in recent years in the crucial US and China markets, at the same time as the trade war being waged between the countries is hitting earnings.
Trump’s steel tariffs have reportedly cost GM and Ford £780m each. The fall in new car sales has troubled car makers at a time when mainstays of the industry – private ownership and the internal combustion engine – are threatened by plans for shared vehicle schemes and electric cars.
The company’s decision provoked a furious reaction from some quarters, with officials in Ohio branding it ‘corporate greed at its worst’. But Bob Lutz, GM’s former vice-chairman, said the company was facing ‘hard facts’.