GM closures to kill Impala, Volt, Cruze sedanGM plans to undergo a restructuring plan that the automaker says will save $6 billion by 2020 – but to do so, it will have to kill some of its classic models.
The plants that will cease production next year are Detroit-Hamtramck, Warren Transmission, Lordstown Assembly in Ohio, Oshawa Assembly in Ontario and Baltimore Operations in Maryland. Work will stop, but plants will not officially close. The future of those facilities will be determined during 2019 negotiations with the United Auto Workers.
GM said the plants ceasing production in 2019 will also signal the end of the products made there.
Oshawa is the only plant building the Cadillac XTS sedan. Detroit-Hamtramck and Oshawa are the only plants building the Chevy Impala. Detroit-Hamtramck is the only producer of the Cadillac CT6, Chevy Volt and Buick LaCrosse as well. Lordstown only makes the Chevy Cruze sedan; the hatchback model is made in Mexico.
Read: GM stopping work at 5 plants, laying off salaried workers
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Author: Detroit News Online
Ghosn's alleged scheme cost Nisson 'millions'
Ghosn's alleged scheme cost Nisson 'millions'Yokohama, Japan – Nissan Chairman Carlos Ghosn, who became one of the auto industry’s most powerful executives by engineering a turnaround at the Japanese manufacturer, was arrested Monday and will be fired for allegedly underreporting his income and misusing company funds, the automaker said.
The scandal reverberated across the globe and abruptly threw into question Ghosn’s future as leader of the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million cars last year, more than any other manufacturer.
Nissan CEO Hiroto Saikawa said Ghosn was taken into custody after being questioned by prosecutors upon arriving in Japan earlier in the day. Ghosn is of French, Brazilian and Lebanese background and lives in both France and Japan.
Nissan said Ghosn, 64, and another senior executive, Greg Kelly, were accused of offenses involving millions of dollars that were discovered during a monthslong investigation set off by a whistleblower. Kelly was also arrested.
“Beyond being sorry I feel great disappointment, frustration, despair, indignation and resentment,” Saikawa said, apologizing for a full seven minutes at the outset of a news conference.
Yokohama-based Nissan Motor said it is cooperating with prosecutors in their investigation.
Read: Disgraced pioneering UAW official faces reckoning
Saikawa said Nissan’s board will vote Thursday on dismissing Ghosn and Kelly, whom he described as the mastermind of the alleged abuses.
“This is an act that cannot be tolerated by the company,” he said. “This is serious misconduct.”
Saikawa said three major types of misconduct were found: underreporting income to financial authorities, using investment funds for personal gain and illicit use of company expenses.
He said that because of the continuing investigation, he could not disclose many details. But he promised to tighten internal controls, saying the problems may have happened because too much power was concentrated in one person.
“We need to really look back at what happened, take it seriously and take fundamental countermeasures,” he said.
Read: Corrupt Fiat Chrysler exec gets 5.5 years in prison
Ghosn officially still leads the Renault-Nissan-Mitsubishi alliance as CEO and chairman. But experts said it is unlikely he will be able to stay on there or at Renault, where he is also CEO. Renault said its board will hold an emergency meeting soon.
“The last thing one of the world’s biggest automakers needs is the disruption caused by an investigation into the behavior of a man who has towered over the global auto sector,” said Michael Hewson, chief market analyst at CMC Markets in London.
The companies in the alliance own parts of each other and share investments in new technologies, among other things. Renault owns 43 percent of Nissan, which owns 15 percent of Renault and 34 percent of Mitsubishi.
Renault SA stock plunged more than 8 percent in France. Japanese markets had already closed when the scandal broke.
Ghosn was at Nissan for 19 years and signed a contract this year that would have run through 2022. His compensation, high by Japanese standards, has been a source of controversy over the years.
According to NHK and the Kyodo News Service, Nissan paid Ghosn nearly 10 billion yen ($89 million) over five years through March 2015, including salary and other income, but he reported receiving only about half that amount.
The allegations are a serious blow at a time when Nissan is still getting over a scandal in which it admitted altering the results of emission and fuel economy tests on vehicles sold in Japan.
Ghosn is credited with helping bring about a remarkable turnaround at Nissan, resuscitating it from near bankruptcy by cutting thousands of jobs and shutting plants. His triumph made him something of a national hero in a country where foreign CEOs of major Japanese companies are relatively rare.
He also looms large in France, where he previously turned Renault around and made it into a global player, notably in electric vehicles. He led the French carmaker through major job cuts and an expensive and contentious bailout, earning the nickname “Le Cost Cutter.”
Ghosn became a nemesis of French unions and left-wing politicians, who saw him as a symbol of capitalism’s excesses, particularly its rich executive pay packages.
Renault shareholders in 2016 voted against Ghosn’s pay package as too generous, but the board ignored the move.
That angered then-President Francois Hollande. Hollande’s socialist government imposed limits on executive pay at state-run companies and tried to do the same in the private sector but backed down amid concerns such action would scare away foreign investment.
Ghosn served as Nissan’s chief executive from 2001 until last April. He became chief executive of Renault in 2005, leading the two major automakers simultaneously. In 2016, he became Mitsubishi Motors’ chairman.
Saikawa said the scandal was a “negative outcome of the long regime of Mr. Ghosn.”
Mari Yamaguchi in Tokyo and Angela Charlton in Paris contributed to this report.
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Ghosn’s arrest casts doubt on Renault-Nissan alliance
Ghosn’s arrest casts doubt on Renault-Nissan allianceDetroit – For years, France’s Renault and Japan’s Nissan struggled to make money in the global auto business.
Then came Carlos Ghosn, a Renault executive who helped to orchestrate an unprecedented transcontinental alliance, combining parts of both companies to share engineering and technology costs.
Now Ghosn’s arrest in Japan for alleged financial improprieties at Nissan could put the nearly 20-year-old alliance in jeopardy.
Ghosn, 64, born in Brazil, schooled in France and of Lebanese heritage, is set to be ousted this week from his spot as Nissan chairman. He could also lose his roles as CEO and chairman of Renault, threatening the alliance formed in 1999 that’s now selling more than 10 million automobiles a year.
He’s been “the glue that holds Renault and Nissan together,” Bernstein analyst Max Warburton wrote in a note to investors. “It is hard not to conclude that there may be a gulf opening up between Renault and Nissan.”
Nissan has said it will dismiss Ghosn after he was arrested for allegedly abusing company funds and misreporting his income. That opens up a leadership void at the entire alliance, for which Ghosn officially still serves as CEO and chairman.
Ghosn added Mitsubishi to the alliance two years ago after the tiny automaker was caught in a gas-mileage cheating scandal. He had even floated the idea of a full merger between the three companies.
“Today’s events throw any prospect of that up in the air,” Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note to investors.
Nissan CEO Hiroto Saikawa has publicly resisted the idea of an outright merger. So with Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer.
The companies now share technology, and they save money by jointly purchasing components.
While there could be some scrutiny of the relationships between the companies, they’re so intertwined now that cutting them apart would be difficult, said Kelley Blue Book analyst Michelle Krebs. “I would not predict its demise,” Krebs said of the alliance.
She said she sees further consolidation in an industry that faces unprecedented research costs for autonomous and electric vehicles, while at the same time continuing to develop cars and trucks powered by internal combustion engines.
“The last thing one of the world’s biggest automakers needs is the disruption caused by an investigation into the behavior of a man who has towered over the global auto sector,” said Hewson.
Nissan’s board is to meet Thursday to consider Ghosn’s fate. Renault, where Ghosn is also CEO, said its board will hold an emergency meeting soon, and experts say it is unlikely that he will be able to stay at the company or the broader alliance.
The brash Ghosn was once viewed as a savior in the auto business with the ability to turn around the two struggling companies. In 2006 he even proposed an alliance with global giant General Motors.
Bernstein’s Warburton wrote that Ghosn’s once-mighty reputation has been declining for years, while Krebs said Nissan never could meet Ghosn’s goal of 10 percent U.S. market share even though it has relied on “bad behavior” such as heavy discounts and sales to rental car companies.
Saikawa reiterated Nissan’s commitment to the venture, while a Renault statement expressed “dedication to the defense of Renault’s interest in the alliance.”
––––
Charlton reported from Paris. News Researcher Rhonda Shafner contributed from New York.
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Congress considers extending electric vehicle tax credits, approval of self-driving cars
Congress considers extending electric vehicle tax credits, approval of self-driving carsWashington — With Congress returning to Washington on Tuesday for a flurry of legislative activity before the end of the year, transportation advocates are hoping to win support for pair of measures that would allow carmakers to sell thousands of self-driving cars and extend tax credits for electric vehicles.
Supporters of a U.S. Senate bill championed by U.S. Sen. Gary Peters, D-Bloomfield Township, that would allow automakers to sell more than 80,000 self-driving cars each per year are hoping to finally pass the measure in the upcoming so-called lame duck session after a year-long wait. They note that the current Republican-led House passed a similar measure with relative ease in 2017.
Additionally, General Motors Co., Nissan Motor Co. and Tesla Inc. have joined forces with environmental groups to form a new coalition that is pushing to remove a cap on a federal tax credit that provides up to $7,500 to buyers of electric cars. GM, Nissan and Tesla, makers of the Chevrolet Bolt, Nissan Leaf and Tesla's electric-fleet, are among the biggest electric car producers in the U.S. Current rules allow automakers to offer credits for up to 200,000 electric vehicles per manufacturer.
Republican senators may be more likely to compromise with their Democratic colleagues on the self-driving legislation instead of waiting to have to negotiate a new deal with the House after Democrats take control of that chamber in January.
A spokeswoman for Peters said he “continues to work with his colleagues on both sides of the aisle” to get the bill signed into law before the end of the year, noting that major companies have already begun testing autonomous vehicles at several sites around the U.S., including at the American Center for Mobility in Ypsilanti Township.
“As companies move forward with their self-driving vehicle plans, Sen. Peters is focused on ensuring there is a federal regulatory framework in place to oversee the safe deployment of self-driving vehicles,” Peters' office said.
But critics of the bill argue that not enough attention is being paid to safety concerns, and that there isn't enough oversight on the road-readiness of the technology.
The picture is slightly more complicated for supporters of lifting the cap on electric car tax credits. A measure by U.S. Sen. John Barrasso, R-Wy., would eliminate the tax credit for electric cars and institute a new tax on electric cars and alternative fuel vehicles to boost the coffers of the federal Highway Trust Fund that pays for construction projects.
A separate measure by U.S. Sen. Dean Heller, R-Nev., would keep the electric vehicle tax credit in place and lift the cap. A similar measure was also introduced by U.S. Sen. Dianne Feinstein, D-Calif., Jeff Merkley, D-Ore., Martin Heinrich, D-N.M. and Catherine Cortez Masto, D-Nev.
Heller lost his seat in last week's election to Democratic U.S. Rep. Jackie Rosen, who has also co-sponsored legislation in the House to extend the electric car tax credit for 10 years. Nevada is home to Tesla's Gigafactory 1 lithium-ion battery factory.
When carmakers hit the 200,000-vehicle ceiling, they face a phasing-out process of the $7,500 tax credit offered to buyers of full-electric vehicles — reducing that credit by half every six months. At least one automaker, Tesla, has already hit the limit, and GM is also expected to hit the mark during the fourth quarter of 2018.
GM sold 23,297 all-electric Chevrolet Bolts and 20,349 plug-in hybrid Chevrolet Volts in the U.S. in 2017.
Dan Turton, vice president of public policy at GM, said in announcing a new group known as the EV Drive Coalition that includes GM, Nissan and Tesla: “A federal tax credit to help make electric vehicles more affordable for all consumers is integral to reaching a zero-emissions future and establishing the U.S. as the leader in electrification. We feel that the tax credit should be modified so all customers continue to receive the full benefit going forward.”
Advocates for the self-driving bill are hoping for favorable action. Scott Hall, director of communications and public affairs of the Washington, D.C.-based Alliance for Automobile Manufacturers, which lobbies for major U.S. and foreign-owned automakers, said automakers “remain optimistic the Senate will take action on this bipartisan legislation, given the tremendous promise of this technology to make our roadways safer and provide greater mobility options to persons with disabilities and seniors.”
But critics of the self-driving bill are on high alert.
John Simpson, privacy and technology project director at the Los Angeles-based Consumer Watchdog group, which has raised concerns about the safety of self-driving cars after recent high-profile crashes, said he is “concerned there will be a mad rush to try to slam it through” now that the contentious election season has passed.
“It's simply insanity to rush through a bad bill just to say you've got a bill,” Simpson said, adding that Congress has done little to address concerns that have been raised by safety groups about giving automakers wide latitude to sell self-driving cars.
Groups that represent trial lawyers have complained about a lack of protections that would ensure the right to sue if someone is hurt or killed in a self-driving car.
Peter Knudsen, director of communications for the Washington, D.C-based American Association for Justice, which lobbies for trial lawyers who typically represent plaintiffs, added that his group is also still “strongly opposed” to the Senate's self-driving bill.
“We remain hopeful that proponents of AV START will adopt the vital changes necessary to ensure that the bill brings transparency and accountability to the driverless car industry,” Knudsen said.
The arguments appear to have held sway with some U.S. senators thus far. At least five have publicly expressed concerns about the measure, pointing to accidents this year that involved Uber and Tesla vehicles that were operating autonomously or semi-autonomously. The opposition prevented the self-driving bill from being quickly passed in the notoriously deliberate upper chamber.
klaing@detroitnews.com
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Official: GM to close Ontario plant, costing 2,500 jobs
Official: GM to close Ontario plant, costing 2,500 jobsToronto – General Motors is planning to announce the closure of its Oshawa, Ontario, plant Monday, which will eventually result in the loss of about 2,500 jobs.
The plant closure announcement was confirmed late Sunday by an official familiar with the decision. The official spoke on condition of anonymity because they were not authorized to talk publicly ahead of Monday’s announcement.
The official said it is part of a global restructuring of GM as they shift focus to lower emitting hybrid vehicles, which is not the focus of the Oshawa plant. GM has informed the Canadian government of the plan.
GM opened its factory in Oshawa, near Toronto, in 1953. The plant is used to make the Cadillac XTS and Chevrolet Impala sedans as well as the Chevrolet Silverado and GMC Sierra trucks.
A GM spokesman declined to comment. GM had been expected to close plants because of struggling sales.
Unifor, Canada’s largest private sector union, said in a statement that it does not have complete details of Monday’s announcement, but it has been informed that there is no product allocated to the Oshawa plant past December 2019.
“Based on commitments made during 2016 contract negotiations, Unifor does not accept this announcement and is immediately calling on GM to live up to the spirit of that agreement,” the union said in a statement on its website.
“Unifor is scheduled to hold a discussion with General Motors (Monday) and will provide further comment following the meeting.”
Oshawa Mayor John Henry said he had not spoken to anyone from GM. Jennifer French, who represents Oshawa in the provincial legislature, said she finds the news “gravely concerning.”
“If GM Canada is indeed turning its back on 100 years of industry and community – abandoning workers and families in Oshawa – then this is a callous decision that must be fought,” she said in a statement.
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Porsche has plan to drive up profit by 6B euros
Porsche has plan to drive up profit by 6B eurosPorsche AG has an ambitious plan to improve operating profit by 6 billion euros ($6.8 billion) over eight years by streamlining operations as the automaker spends more to develop and manufacture electric cars, according to people with knowledge of the matter.
Porsche aims to increase earnings before interest and taxes by about 750 million euros annually over a timeframe starting this year and running through 2025 by increasing efficiencies, cutting costs and boosting contribution from new business such as digital offerings, said the people, who asked not to be identified because the discussions are private. The increase is necessary to maintain the Volkswagen AG brand’s target of a 15 percent return on sales. Porsche declined to comment.
Keeping returns flowing at Porsche is key to Volkswagen’s plan to make the world’s largest automaker a more agile company and face the industry’s unprecedented shift to self-driving and electric cars head on. Carmakers readying electric lineups are pushing for savings elsewhere to offset lower profits from battery-powered cars when compared to vehicles with combustion engines.
Take Porsche’s first electric offering as an example of the quandary facing automakers. Cars like the four-door Taycan, which comes to market next year, will cost from 6,000 euros to 10,000 euros more to produce than a comparable traditional model, the people said. Those costs won’t be passed on to customers, meaning spending reductions need to be made elsewhere to maintain profitability, they said. In total, the sports-car maker is investing more than 6 billion euros through 2022 on electric mobility.
After 2025, the German manufacturer anticipates that the efficiency push will improve profit by about 2 billion euros annually, the people said. VW’s most profitable brand generated 4.1 billion euros in operating profit and 23.5 billion euros in revenue last year. The operating margin of more than 17 percent compares to single-digit return on sales at most mass-market carmakers.
The group is on its way to become “the electric powerhouse within the auto world” and should have higher revenue and earnings momentum than Daimler AG and BMW AG, Bankhaus Metzler analyst Juergen Pieper said in a note.
Porsche is working on electric-car technology with sister brand Audi and is considering using the jointly developed underpinnings to offer electric versions of existing models like the Macan compact sport utility vehicle. Porsche has said the first cars from the new platform are planned for late 2021.
Porsche expects half of deliveries will be fully-electric or hybrid cars in 2025. Developing vehicles with combustion engines won’t be economically viable from 2030 onward under the goals of the Paris Climate accord, they said.
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Ride-hailing app Gett seeks buyers
Ride-hailing app Gett seeks buyersGett Inc., the ride-hailing app valued at more than $1 billion and backed by Volkswagen AG, is looking for buyers in a bid to compete with larger rivals, people familiar with the matter said.
The Israeli tech company has approached potential bidders including other car-hire firms, the people said, asking not to be identified because the discussions were private.
Gett may sell its entire business or offload regional operations outside of its home market, said two of the people. The company may also weigh a listing, partnership or sale of a minority stake to raise capital, another person said.
Deliberations are preliminary and there’s no guarantee Gett will go ahead with a sale or initial public offering, the people said.
“As Gett is on a clear path towards profitability globally, including the U.S.,” in the first half of 2019 “it should not be surprising that Gett may receive inbound inquiries from strategic partners,” a spokesman for Gett said.
Gett had a promising start, attracting more than $300 million from Volkswagen in 2016 as the carmaker looked for a viable challenger to Uber Technologies Inc. and Lyft Inc. This year Gett has raised $80 million from investors including Swedish fund manager Vostok New Ventures Ltd.
However, the business has been struggling in the face of growing competition.
Vostok cut the value of its stake by 14 percent so far this year, according to its third-quarter report. That puts its 4 percent holding at $55.5 million, giving Gett a value of about $1.39 billion. Volkswagen has also decided to funnel resources into a home-grown ride-sharing unit called Moia.
Facing intense competition in the U.S., Gett has also weighed an exit from the country just over a year after spending $200 million on an acquisition to enter the market, people familiar with the matter said in July.
Gett isn’t the only ride-hailing company struggling to maintain growth. Uber’s sales are dramatically slowing even as the firm spends more to expand. Lyft’s losses increased to $254 million in the third quarter from $195 million last year after spending more on research and development, a person familiar with the matter said. The two companies are also considering IPOs next year.
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Nissan board fires Ghosn as chairman following arrest
Nissan board fires Ghosn as chairman following arrestTokyo – Nissan Motor Co. fired Carlos Ghosn as chairman Thursday, curtailing the powerful executive’s nearly two decade long reign at the Japanese automaker after his arrest for alleged financial improprieties.
In an hours-long meeting, the company’s board of directors voted unanimously to dismiss Ghosn as chairman and as a representative director, Nissan said in a statement. It said its own internal investigation, prompted by a whistleblower, found serious misconduct including under-reporting of his income and misuse of company assets.
It was a stunning downfall for one of the biggest figures in the auto industry, a man who helped drive turnarounds at both France’s Renault SA and at Nissan and then managed an alliance between them that sold 10.6 million cars last year, besting its rivals.
Nissan said in a statement filed to the Tokyo Stock Exchange that its investigation uncovered misuse of company investment funds and expense money for personal gain.
This week, Renault voted to keep Ghosn as its chief executive but appointed COO Thierry Bollore as its interim chief.
Another Nissan executive, Greg Kelly, was arrested in Japan on suspicion of collaborating in the wrongdoing and also will be dismissed as a representative director, Nissan said.
Ghosn, 64, is suspected of under-reporting $44.6 million in income from 2011 to 2015, according to Tokyo prosecutors.
Nissan’s board consists of nine members, including Ghosn and Greg Kelly. The seven other board members voted at the meeting, including two members from Nissan and two from Renault.
Ghosn and Kelly will remain on Nissan’s board for now as that decision will be up to shareholders. No date has been set yet for a shareholders meeting.
Ghosn is also chairman at Mitsubishi Motors Corp., a smaller Japanese automaker that’s partnering with the Renault-Nissan alliance and plans to hold a board meeting next week.
Ghosn has been held since his arrest Monday at a Tokyo detention center, under the same Spartan conditions as other detainees, Tokyo deputy prosecutor Shin Kukimoto told reporters Thursday. He gave few details about the case.
Under Japanese law, suspects can be held for 20 days per possible charge without an official indictment. Additional charges can be tagged on, resulting in longer detentions. Neither has been charged so far.
The maximum penalty upon conviction for violating finance and exchange laws is 10 years in prison, a 10 million yen ($89,000) fine, or both.
A French citizen born in Brazil, Ghosn became something of a corporate superstar in Japan as he led Nissan’s revival from near bankruptcy after Renault sent him to help in 1999.
Ghosn served as Nissan’s chief executive from 2001 until last year. He became chief executive of Renault in 2005, leading the two automakers simultaneously. In 2016, he also became chairman of Mitsubishi Motors Corp. after Nissan took it into the alliance.
Kelly, 62, joined Nissan, maker of the Leaf electric car and Infiniti luxury models, in the U.S. in 1988. He became a board member in 2012. His background is in human resources and alliance management.
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2.7M GM vehicles probed for faulty brake vacuum pumps
2.7M GM vehicles probed for faulty brake vacuum pumpsThe U.S. government is investigating more than 100 complaints of poor brake performance on 2.7 million General Motors big pickups and SUVs.
The National Highway Traffic Safety Administration says a brake vacuum pump can deteriorate, causing increased braking effort and longer stopping distances.
The agency has 111 consumer complaints including nine crashes and two injuries.
The investigation covers 2014 through 2016 Chevrolet Silverado and GMC Sierra pickups. Also involved are Chevrolet Suburban and Tahoe, the GMC Yukon and Cadillac Escalade SUVs.
The agency will determine how often the problem happens and whether a recall is necessary.
GM is monitoring complaints and warranty claims about the brakes and is working with NHTSA to evaluate them, spokesman Tom Wilkinson said Friday.
Any owner who has a problem with brake performance should have them examined by a GM dealer or independent repair shop, Wilkinson said.
They should keep receipts because they could be reimbursed for repairs if there is a recall, he added.
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GM culture could be tested in buyouts
GM culture could be tested in buyoutsAs General Motors Co. navigates buyouts and possible layoffs amid good times and strong profit margins, experts say the Detroit automaker will have to prioritize company morale.
GM offered six months pay and six months health care beginning in February to North American salaried employees and global executives with 12 or more years of experience. The deadline to accept the offer was Monday, but company officials refuse to characterize the number of takers because individual department managers still must assess whether prospective buyouts will help them meet cost-cutting targets — or not.
“This is a really tough challenge and there are no easy answers,” said Harley Shaiken, a professor specializing in labor issues at the University of California at Berkeley. “The value of morale in a company that is increasingly a player in a high-tech universe is critical. This isn't simply a money-saving decision, it’s about what’s GM's culture going forward.”
The buyout GM is offering is already the company's maximum severance package, and it's likely a similar or the same package that would be offered in the event of layoffs, according to two sources familiar with the situation. Employees offered layoffs also likely would qualify to collect unemployment compensation.
More: After buyout deadline, GM's workforce faces greater change
More: Howes: GM aims to drive transformation, promising risk, disruption
More: Profitable GM looking to cut costs with buyouts
Employees have to be with the company for at least 12 years to qualify for the maximum severance. And a layoff program — which GM has said it will have to consider if the current buyout program doesn't reach an undisclosed cost-saving target — could be more wide-reaching than the targeted buyouts, one of the sources said, and offers would likely be based on years served with the company.
“In a way there is no standard (for buyouts). It all depends on the context and the alternatives the employee believes she or he has,” Shaiken said. “But in a good economy, six months pay is not a lot.”
At the same time, these buyouts are offered at a time when unemployment is at a 49-year low. That bodes well for GM employees who were already thinking about making a career change.
“When the unemployment rate is really low like it is now, it makes sense for companies who can afford it to offer buyout programs,” said Andy Challenger, vice president of Challenger, Gray and Christmas, a Chicago-based employment firm. “Inevitably, these people are getting headhunted, finding their own jobs or even thinking about starting their own business.”
And GM has so far taken the right steps to communicate to its staff why these actions are necessary, Shaiken said.
“People understand economic realities even when they are painful,” he said, pointing out that GM's buyout offer makes the most sense for workers already close to retirement. “The best thing a company can do is be transparent about these decisions and why they are making them.”
Given GM's commitments to an autonomous, emissions-free future, Shaiken says the company's efforts to overhaul the workforce shouldn't come as too much of a surprise to the people impacted.
“GM is publicly embracing the new realities they see,” he said. “It's clear the company is seeking to cut in areas they are strong, but also where right now the writing is on the wall.”
The Detroit automaker has said its future is driverless and electric, and it has backed up that claim with big bets in those areas. GM is planning to spend $1 billion this year on its GM Cruise LLC operation, the company's self-driving vehicle development arm. And $500 million of that will be spent largely on hiring in the fourth quarter, CEO Mary Barra told investors after the company released its third-quarter earnings.
“We must acknowledge that there is still much more to do in transforming General Motors into the automotive company of the future,” Barra wrote in a memo sent to employees on Halloween. “We are accountable for how we run our business, both in the day-to-day and in anticipating the road ahead. Today, our structural costs are not aligned with the market realities nor the transformational priorities ahead.”
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