General Motors to significantly cut car production in North America and stop making some models

  • General Motors will significantly cut car production in North America, Reuters reported.
  • A Canadian union said GM is set to make a major announcement Monday that will affect its global operations, including auto production at an Ontario plant.
  • Unifor, which represents most autoworkers in Canada, said it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019.
GM Oshawa Car Assembly Plant.
Vince Talotta | Toronto Star | Getty Images
GM Oshawa Car Assembly Plant.

General Motors plans to announce as early as Monday it will cancel six car models, including the plug-in hybrid Chevrolet Volt, Reuters reported Monday, citing an unnamed source.

GM is reportedly planning to stop allocating vehicles to three assembly plants. Canadian union Unifor said GM had informed them of their plans to stop allocating products to the Oshawa Vehicle Assembly plant in in Ontario, Canada in December 2019.

The largest U.S. automaker also plans to cut production at plants in Michigan and Ohio, Reuters reported.

GM did not immediately respond to a request for comment to CNBC on Monday.

GM has been cutting jobs to deal with plunging car sales in North America. The company has internally debated for months how to address shrinking car demand, a person briefed on the matter told Reuters, and the issue is certain to re-emerge when GM holds contract talks next year with the United Auto Workers union.

GM is expected to announce as soon as this week some involuntary salaried layoffs after it did not get as many volunteers to accept buyouts as hoped, the person briefed on the matter said.

GM said on Oct. 31 that about 18,000 of its 50,000 salaried employees in North America are eligible for the buyouts.

The stepped up cost-cutting and restructuring at GM comes as many industry executives and analysts predict that overall vehicle sales in the United States will decline further in 2019 and 2020.

At the same time, China, the world's largest auto market and GM's biggest market by vehicle sales, has decelerated sharply in the past few months.

Analysts have said GM has too many North American plants building slow-selling sedans.

GM shares are down 12 percent for the year, and GM Chief Executive Mary Barra, in a message to employees last month, cited the stagnant share price as a reason for tougher restructuring measures.

She said the automaker had negative cash flow for the first nine months of the year and it needed to cut costs.

Buyouts

GM has been offering buyouts to North American salaried workers and has said it could lay off white-collar staff if it does not hit its target to cut costs.

The person briefed on the matter confirmed that GM planned a major announcement on the future of the Oshawa plant, but said the automaker wanted to notify employees of its plans before making any announcements.

Total vehicle production at the Oshawa complex fell 60 percent through the first ten months of 2018 from the same period a year ago, according to Automotive News production data.

GM employs about 2,500 union staff in Oshawa which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks which are shipped from Indiana.

Political pressure in Canada is already mounting on GM, which had accepted billions of dollars in aid from the U.S., Canadian and Ontario governments after filing for bankruptcy protection during the 2009 global economic downturn.

"We are aware of the reports and we will be working in the coming days to determine how we can continue supporting our auto sector and workers," a Canadian government official said.

"The jobs of many families are on the line," said Colin Carrie, a Member of Parliament for Oshawa. "Communities all over Ontario would be devastated if this plant were to close.

The U.S.-based automaker has other operations in Canada, including a plant in Ingersoll, Ontario, where it assembles the Chevrolet Equinox.

The reported plant closure is a further blow to the Canadian auto industry, which has lost jobs to the United States, where governments offer manufacturers rich incentives, and Mexico, where labor costs are lower.

However, a new trade deal that the United States, Mexico, and Canada struck in September leaves significant room for Canadian plants to grow exports duty-free.

—CNBC's Robert Ferris contributed to this story.