Bad sign for car companies? GM cuts 1,300 jobs in Detroit

GM says it will eliminate the second shift at its Detroit-Hamtramck plant in March, cutting about 1,300 of its 3,000 jobs.

First Look

As auto sales slow, a Detroit-based GM plant plans to eliminate nearly half of its 3,000-person workforce in layoffs this March.

Industry workers say that for years, consumers have preferred more compact, fuel-efficient vehicles, but now that cheap gas is giving car-buyers more of a reason to purchase bigger vehichles, trucks and crossover SUVs are once again becoming popular.

“It’s a pendulum and now it’s shifting our way,” Glenn Johnson, president of United Auto Workers Local 1112 in Lordstown, Ohio, where more than a thousand auto workers will lose their jobs next month. “It wasn’t that long ago that gas was $3.50 a gallon and we were feeling for our friends in truck plants.”

March’s layoffs will occur at GM’s Detroit-Hamtramck plant, which will see about 1,300 employees lose their jobs. Within the next several months, more than 3,000 GM employees at three separate plants can expect to lose their jobs. The company says it will try to find other local jobs for as many workers as possible.

The Detroit-Hamtramck plant manufactures Volt hybrids, Cadillac CT6 vehicles, Chevrolet Impalas, and Buick Lacrosses.

“It’s all car plants,” said Morningstar Inc. analyst David Whiston, according to Bloomberg. “Compact cars and sedans are out of favor, so you have to cut the production.”

GM is also temporarily idling a number of plants in manufacturing states such as Kentucky and Michigan because of what it says is an oversupply of cars in the market. CNN Money reports that GM’s inventory of cars in the United States is 873,000 vehicles, as opposed to 691,000 last year.

GM’s planned layoffs will take place just months after the inauguration of president-elect Donald Trump, who campaigned on promises to keep manufacturing jobs in the United States.

In early December, David Iaconangelo reported for The Christian Science Monitor on Mr. Trump’s apparent success in keeping some manufacturing jobs in Louisville, Kentucky. Mr. Iaconangelo wrote:

In November, the president-elect took credit for persuading Ford not to relocate the Louisville, Ky., plant to Mexico. In fact, the plant had only planned to relocate production of a Lincoln SUV – not the jobs of the people who made it – since the terms of a 2015 agreement with the United Auto Workers Union prohibited it from doing so without further negotiations with the union.

But Mr. Fields also said that Trump had “influenced” Ford's decision to keep Lincoln SUV production in the US, applauding what he called favorable proposals from the president-elect on tax reform and infrastructure spending.

It remains unclear whether or not Trump will be able to keep jobs like GM's in the United States in the face of a changing market.