General Motors has begun a long and expensive transition to a new business model. Photo: AP

JOHANNESBURG – General Motors Company will cut car production, stop building several slow-selling models and slash its North American workforce, sources said yesterday, marking its biggest restructuring in North America since its bankruptcy a decade ago. 

GM plans to halt production next year at three assembly plants – Lordstown, Ohio; Hamtramck, Michigan; and Oshawa, Ontario; the sources added. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse, the sources said. 

The issue will be addressed in talks with the United Auto Workers union next year. GM chief executive Mary Barra made calls early yesterday to disclose the plans, the sources said. 

GM declined to comment before an expected announcement. 

Shares were up 2.2 percent at $36.72 (R507.52). 

Cost pressures on GM and other carmakers and suppliers have increased, as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1 billion. 

A Canadian union, Unifor, which represents most unionised car workers in Canada, said on Sunday that it was informed by GM that there would be no product allocated to the plant in Oshawa, about 60km from Toronto, after December 2019. 

GM employs about 2 500 union staff in Oshawa, which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pick-up trucks, shipped from Indiana. 

GM has begun what is expected to be a long and expensive transition to a new business model that embraces electrified and automated vehicles, many of which will be shared rather than owned.      

The No 1 US carmaker signalled the latest belt-tightening in late October when it offered buyouts to 50 000 salaried employees in North America, with the aim of reducing headcount by 18 000. It plans to trim executive ranks by 25 percent, the source said.  

With US car sales lagging, several car plants have fallen to just one shift, including its Hamtramck and Lordstown assembly plants.  

A rule of thumb for the automotive industry is that if a plant is running below 80 percent of production capacity, it is losing money. 

GM has several plants running well below that. 

Consultancy LMC estimates that Lordstown will operate at just 31 percent of production capacity this year. 

BUSINESS REPORT