General Motors, Ford say layoffs coming but they’re not ‘painful’

G.M. Chairman and CEO Mary Barra confirmed on Tuesday that the company plans to cut 5,000 jobs over the next year as part of its restructuring. But she says the cuts will not be…

G.M. Chairman and CEO Mary Barra confirmed on Tuesday that the company plans to cut 5,000 jobs over the next year as part of its restructuring. But she says the cuts will not be “painful” and “we’re doing everything to make this business great again.”

Barra also said that the company would drop the full G.M. name from its car lines to help the public identify its car brands. In an effort to do that, the company will introduce a new nameplate to the US market in late 2020, and another one in 2023.

Barra’s comments come the day after the New York Times reported that Ford Motor Company (NYSE:F) is looking to hire 3,000 employees for a new autonomous-vehicle initiative that would include electric cars. And CEO Jim Hackett said that the automaker will not cut any of its 12 production factories.

Last week, the Financial Times reported that General Motors was planning to close some of its Europe factories, adding about 3,000 jobs by the end of 2020. The company responded by saying that these are “wildly inaccurate” stories.

Detroit automakers’ post-bankruptcy transformations are under scrutiny

Barra’s comments echo comments Hackett made in April. Hackett, who had been CEO of Ford prior to his appointment as an interim “consultant” last October, said that he wanted to assemble an all-new leadership team at Ford and had given the organization until early 2019 to develop a plan.

Barra says that over the next year, G.M. will make investments in new technology and materials, creating “a clear path to profitable, sustainable growth in a 21st-century global auto industry.”

Among the priorities of those investments, Barra mentioned new battery technology and electric vehicles. G.M. plans to launch 20 new battery-electric vehicles by 2023, she said. It will also introduce an all-new plug-in hybrid version of its Silverado pickup, which is its best-selling vehicle, in 2020.

Some of the problems at G.M. are self-inflicted

Those are the most obvious of G.M.’s problems, and the ones that it can solve on its own.

Its nearly $14 billion loss last year reflects the daunting challenges facing the auto industry globally. Most of G.M.’s problems are of its own making. Under the leadership of former CEO Mary Barra, many of G.M.’s subcompact and subcompact-size vehicles that sold well in North America fell out of favor with buyers in other markets, and the automaker had to take massive charges to cover the resulting decline in earnings.

But many of those problems were of G.M.’s own making. Its global volume-car operations were run erratically, with frequent launches of troubled vehicles. Parts shortages that stalled production put pressure on GM’s bottom line. This year, G.M. has said it will take more than $4 billion in charges related to its global vehicle-development programs.

That sum also includes billions in costs related to the recent recall of faulty ignition switches and other vehicle-safety systems.

Will investors appreciate the moves made by G.M. and Ford in the future?

With Toyota and Honda (NYSE:HMC) starting to lead a shift in auto design to offer more room, roomier vehicles with more interior space, and with Tesla and other companies introducing increasingly advanced electric vehicles, it’s hard to say whether any old Detroit automaker could win back customers’ loyalty — or whether any new Detroit automaker could build enough profitably from selling cars in North America.

Hackett and Barra have specific, substantial objectives. Barra has had an 11 months to see if she can turn around G.M.’s woes, but she remains the one holding the bag. Hackett has already been through a similar trying period at Ford: His campaign to turn around Ford’s woes apparently ran aground when the company’s U.S. dealers told him that they did not want a lot of new vehicles rolled off assembly lines in the United States over the next few years.

Time will tell whether Hackett and Barra can truly take the turnaround initiatives they have laid out and transform their companies.

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