In the society that we live in, the economy plays a major role in how companies plan for their future. If the economy is strong companies can expand and be able to hire new workers. If the economy is in a recession, companies will have to make cutbacks to save money. But for General Motors, their situation proves that no matter how strong the economy is, no one is safe from losing their job.
One of the leading automobile companies, General Motors (GM) announced that they will be closing five factories by the end of 2019 in Ohio, Michigan, Maryland, as well as a factory in Ottawa, Canada. As a result, over 14,000 workers will be out of a job. As a company in general, the idea of coming up with the newest and cheapest product that consumers will buy keeps companies in business. As fierce as the automotive business is with companies like Ford, Volkswagen, Honda, and Chrysler coming out with new cars featuring more technology than ever before, while also being eco-friendly, it is important for a business to be creative in their products—and unfortunately for GM that hasn’t been the case.
GM has been a leader in the production of pick up trucks and SUVs, but as the demand for more economic vehicles has grown in recent years, the demand for once popular SUVs and pick up trucks like the Chevrolet Cruze, Buick Lacrosse, and Cadillac CT6 have dropped, and as a result will be discontinued from production. The plants that GM are decommissioning are all plants that made the pick up trucks and SUVs that made GM popular. According to the Detroit Free Press, the cutbacks will save the company six billion dollars and only half the workers who lose their jobs will have the chance to relocate to other GM factories in the future.
This isn’t the first time GM has had problems. In 2009, GM became the 4th largest company to declare for Bankruptcy as a result of the economic collapse of 2008. But the difference between the bankruptcy of 2009 and the closure of five factories in 2019 is that instead of an economic crisis, GM is in an identity crisis with its consumers.
During GM’s bankruptcy battle of 2009, the Obama Administration had to step in and save GM and the automotive industry from complete collapse at the cost of possibly losing thousands of jobs and millions of dollars from the hurting economy. According to a CNN article, the U.S. government loaned GM 17 billion dollars so that the company could make a swift recovery. But as a cost the then C.E.O. of GM, Rick Wagoner, would be required to step down from his position.
GM should have been better prepared and are now again paying the price for turning a blind eye towards the changing automotive industry. And as a result, 15,000 workers will have to find a new job as a result of GM’s second big mistake in just nine years.
Now that GM is back in the the wrong end of the news, President Trump has shown his displeasure with the current situation that GM is in. During his campaign, the importance of keeping jobs in America was popular with his supporters. In a article in the New York Times, President Trump threatened to eliminate subsidies that GM receives from the government, while also blasting GM for keeping companies open in China and Mexico – even though there is only one operating GM plant in China.
As times change, companies have to take the necessary steps to produce new products that conform to the changing society that we live in. For the automotive business, this means introducing vehicles that have the latest technology while also being eco friendly. GM is no exception, and this change should have come sooner rather than later.