GM Announces Decision
General Motors has announced that the decision to discontinue the manufacturing of six of their brands could see a reduction of salaried employees by about 15 percent and those working under contract by about 25 percent. In general, General Motors estimates that close to 14,000 jobs will be lost in the process. The budget cuts, however, will enable the multi-national company to save about $ 6 billion. The company also plans to discontinue the production of other models that are produced in the factories that it considers as idle-plants. The manufacturer’s decision to discontinue the production of the mid-sized sedans seems to make sense based on the statistics about the manufacturer’s sales of vehicles in this class. General Motors recorded a 12 percent decrease in overall sales in United States with the sales of mid-sized sedans being the worst when compared to the general sales made by the company. While the company’s decision to discontinue the production of some of its models might be justified by such trends, it is obvious that the brand is facing problems that run deep.
No Longer Distributing
One of the models that General Motors plans to stop producing and distributing in the market is the Buick Lacrosse. The news that the company will discontinue the production of some of its models could have some effects in the auto market. For instance, some people could be wondering what it is like to buy vehicles that are no longer in production. The brand has been in the market for over 115 years. The manufacturer has acknowledged that there are plans to remove the brand from the market and retain only the Tri-Shield logo and drop the Buick name. Currently, the model is sold through the manufacturer’s Buick dealerships and soon the name will be dropped as it is in China where Buick cars do not feature the name either.
Another reason why GM is terminating the production of Buick Lacrosse is the fact that many rental car firms across the country seem to be over-fleeted. Across the country, car rental companies have always been a critical aspect of the automobile industry since they represent a big part of the biggest car buyers. The reason behind the increased over-fleeting of car rental companies is mainly due to the changing dynamics in the automobile industry and other emerging trends in the country. Such new trends include rideshare services for different categories of travelers. As many rental car companies trim their car purchases, manufacturers are finding themselves confined to a corner and restructuring their car brands seems to be the wisest decision they can make.
Although the reported cuts from GM seem to target models that are not doing well in the market, it seems to cut across to the top. The company is also making plans to find a way to cut a quarter of the company’s executive team with the aim of ensuring that operations are streamlined and the company makes profits. These plans by the multi-national company to look for ways of cutting down operational cost suggest that the company might be assuming a long-term approach of maximizing profits. This means that its shift towards a leaner structure could be permanent and likely to affect most aspects of its future operations.
Although the cuts seem to be inevitable, the manufacturer maintains that production in the plants that it considers idle will continue throughout 2019. The firm also reveals that negotiations with the relevant stakeholders and other affected parties are still underway. For instance, the company has been in negotiations with the worker unions on the best way to lay off the surplus employees without violating the labor laws. While the negotiations might seek to push for a mutually agreeable outcome, the firm might face some resistance. For instance, Canada’s Unifor Union, which represents most of the people who work in Oshawa, released a press statement in which they promised to fight the plans to close the plant.