In the direction of nimbleness, General Motors announced this week they were closing down five North American plants, letting go 14,000 hardworking folks (15 percent of the company’s US work force) and up to 25 percent of their worldwide administrative staff.
GM let go all these folks because they worked on sedans and the hybrid Volt…not the trucks and SUVs and Crossovers that are more popular today.
Oddly enough, GM has a vision for zero-emissions in the future but that seems somewhat at odds since now the company has chosen to focus on trucks, SUVs and Crossovers—not exactly gas dieters.
So why does a company say it is investing in a low-carbon future when obviously current demand is trending toward high-end gas guzzlers?
Industry analyst at Edmunds.com Jeremy Acevedo said:
“There definitely is a huge disconnect between 70 percent of the market today that’s SUVs and trucks, and the autonomous and EV future that’s advertised.”
He doesn’t see this entirely at odds as a strategy:
“It comes down to really leveraging the high-profit nature of the SUVs and trucks that are so popular today…so they can really focus on bridging over to the future that’s really autonomous and electric.”
He adds that even though it seems counterintuitive, the sale of the larger vehicles should pave the way financially for the sale of smaller, more fuel-efficient and electrified cars that will be in the autonomous future.
“I definitely think that GM’s international strategy, more than ever now, is dictating what we’re going to see in the US. I believe a big part of the commitment that we’re seeing to the EV architecture is because so many international markets are demanding the production of electric vehicles.”
In a GM investor statement this week, management stated that reducing the GM workforce by 15 percent will increase their annual adjusted cash flow by about $6 billion due to cost reductions of $4.5 billion and a decrease in capital expenditure by $1.5 billion.
The company also told investors that GM is still committed to new products, including electric vehicles (EVs) and driverless car systems, “Resources allocated to electric and autonomous vehicle programs will double in the next two years.”
Maybe this is how the company becomes more nimble…make customers buy the new big shiny things so later they will want the smaller less get up and go shiny things…Does seem rather counterintuitive and perhaps a big gamble.
General Motors President Daniel Ammann said recently that Autonomous Vehicles or AVs represent “the biggest business opportunity since the creating of the internet.”
In the reshuffling of GM this week, Ammann will now become the CEO of the company’s self-driving unit, GM Cruise, beginning January 1. The company plans to aggressively push robot cars to market beginning in 2019.
GM CEO Mary Barra made this statement on Thursday:
“These appointments further demonstrate our commitment to transforming mobility through the safe deployment of self-driving technology and move us closer to our vision for a future with zero crashes, zero emissions and zero congestion.”
GM’s Cruise unit is currently valued at $14.6 billion and in October, the company announced an autonomous car partnership with Japanese automaker Honda.
But not all is rosy on the GM front. Not only do you have thousands of workers thrown out of work plus all the businesses who support those who were working in the plants…President Trump was visibly angry this week with all the news of the plant shutdowns by GM.
He said on Wednesday that GM should pay back the money the government spent to keep it afloat as part of the auto industry bailout as a result of its 2009 bankruptcy. At one point, the feds held a 61 percent equity stake in GM and lost $11.2 billion on its bailout, according to a government report. That’s how much Trump wants back.
The National Review asked this question in a post: What did America really get for the Bailout?
Let’s just wait and see how nimble GM really is…
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