General Motors has launched a seismic shift within its company that could have far-reaching implications for industrial real estate.
The automotive giant announced Monday it will close three assembly plants and two propulsion plants in North America next year, as well as lay off 15% of its workforce. The moves are part of a multibillion-dollar restructuring for GM, which will focus on electric and autonomous vehicles.
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The assembly plants that will close are the Detroit-Hamtramck, Lordstown and Oshawa facilities in Michigan, Ohio and Ontario, Canada, respectively. The propulsion plants are located in Warren, Michigan and the Baltimore suburb of White Marsh, Maryland.
GM saw its shares rise after it released the results of a surprising third quarter in which revenues were up more than they had been in any quarter since 2011. Sales numbers were buoyed by its larger, more expensive vehicles, such as the Chevrolet Traverse and Equinox, along with a large sales bump in China, Bloomberg reports.
The Chevrolet Impala, Buick LaCrosse, Cadillac CT6 and electric Chevrolet Volt, all made at the Detroit plant, will be discontinued after 2019.
“What we’re doing is transforming this company,” GM CEO Mary Barra told the Detroit Free Press. “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."
Of the layoffs, GM expects 25% of its executive level to be cut. It recently offered buyouts to around 18,000 of its employees, and announced the involuntary cuts within weeks of the opt-in deadline for buyouts passing, Bloomberg reports. GM expects to spend $3B to $3.8B in the restructuring, which it expects to be more than offset by a projected $6B in cost savings by the end of 2020.
Barra told the Free Press that despite the layoffs, GM is still hiring, especially for workers with skills in fields relevant to autonomous vehicles and zero-emission propulsion.
The company's San Francisco-based autonomous division, GM Cruise, has received investment from sources such as the SoftBank Vision Fund, but recorded $534M in losses this year, according to Bloomberg.
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