General Motors CEO Mary Barra is putting her pedal to the metal in an attempt to keep the automaker ahead of slowing sales and technological disruption.
In fact, her latest plan for the company’s “transformation for the future” envisions one of the biggest streamlining initiatives ever attempted by a major automaker (one that isn’t in the midst of a recession or some other existential corporate watershed).
Barra announced that GM plans to cut up to 14,800 jobs and end production at several North American plants in the company’s first significant downsizing since its bankruptcy a decade ago. It potentially will eliminate some important sedan models, including the ageless Chevrolet Impala; the Chevrolet Volt, GM’s first bid on electric cars; and the Cadillac CT6, a new model that was positioned as a fresh flagship for the troubled luxury brand.
Barra is determined to stay a step ahead of both automotive rivals and new industry interlopers in an era of increasing instability and vulnerability in the ranks of carmaker CEOs. Top executives at five other major automakers – Nissan-Renault, Ford, Fiat Chrysler, Volkswagen and Mercedes-Benz – are either in big trouble, just past trouble, recently installed, relatively unproven or about to move on.
GM is trying to adjust to slumping consumer demand for sedans at the same time it devotes more investment to its highly profitable trucks and SUVs. It’s also shifting more resources into its accelerating – and increasingly successful – efforts in electric and autonomous vehicles.
The moves affecting plants in the United States and Canada will face opposition by governments and the United Auto Workers. Already, President Donald Trump has expressed outspoken dismay with Barra and GM for closing plants in Michigan and Ohio. Trump said he talked with Barra over the production cutbacks and is asking GM to open new plants “very quickly.”
“They say the Chevy Cruze is not selling well. I say well then get a car that is selling well and put it back in,” Trump said to reporters.
In a statement, Barra seemed determined to carry through in the interests of a leaner and reorganized GM that’s better prepared to take on the threat of a recession in the next few years. It also says it will be able to better compete in the coming era of driverless vehicles.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable,” Barra said. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
In some ways, Barra’s actions could be described as derivative. FCA, under the late Sergio Marchionne, eliminated U.S. sedan production a few years ago and Ford Motor CEO Jim Hackett said earlier this year that the company will be phasing out most sedans.
And it was Marchionne who made a strong point in 2015 that the global automotive business had entered a treacherous age in which there was simply too much production capacity around the globe. Eventually, he said, it would need to be rationalized. He tried hard, but in vain, to get Barra to entertain the idea of acquiring FCA in order to facilitate that process.
Yet in terms of its scope, size and anticipatory intent, Barra is a clear trailblazer with her new plan, acting more decisively and with more dispatch than her peers in the face of developments that they all believe will be transformational.
But really it shouldn’t be too much of a surprised that Barra took such a lead. She has stunned Silicon Valley by leading GM to a strong early showing in autonomous-driving technology. She shocked investors last year by selling GM’s chronically unprofitable European operations, thereby giving up on the pursuit that all her predecessors had shared of making General Motors the undisputed world leader of the auto industry.
And most recently, Barra unsettled her own troops by launching a plan to buy out as many as 18,000 white-collar employees who have been with the company since 2006 or earlier. Barra probably isn’t done yet. But executing her new plan will keep her and GM busy for a while.