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GM Cuts 700 Workers, Blames Drop in Sales on COVID-19

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General Motors (GM) announced this week it is reducing output and eliminating about 700 factory jobs in its Spring Hill, Tenn., plant because of a drop in sales, which the company blames on the COVID-19 pandemic, according to CNN. The layoffs will leave 3,000 workers still employed at the plant, which makes Cadillac XT5 and XT6 SUVs, as well as the GMC Acadia.

The company said its actions are in response to the lack of demand for new cars — millions of people are out of work or working from home and no longer need a car to commute. CNBC reported in May that new vehicle sales in the United States are slowly recovering, but were still expected to be significantly down from a year ago.

“Today’s market conditions continue to evolve as we see the impact of COVID-19,” said David Barnas, GM spokesperson. “We believe the best way to react to this unforeseen change in our market is to reduce output and operate on two shifts effective immediately. This adjustment allows the plant to maintain stable production, protect the value of our brands in any sales environment and to provide the smallest impact to plant employment going forward.”

While the COVID-19 pandemic is the cause for this recent round of layoffs, automakers are no strangers to cutting thousands of jobs to trim costs. In November 2018, GM idled five factories in North America and cut about 14,000 jobs to reduce costs. The company in February 2019 laid off another 4,000 salaried workers as part of its restructuring to shrink its white-collar workforce in North America by 15%

In May, Ford said it was nearing the end of laying off 7,000 salaried positions in an effort to redesign its business going forward. “We have been very clear that we are in final stages of a reorganization of our salaried workforce,” Ford Spokesman Brad Carroll told the Detroit News. “At the same time, we are working across the company in many other ways to reduce costs and become more fit. As we have said, this is not simply a restructuring or cost-cutting plan, it’s a complete redesign of our business now and in the future.”

June sales numbers have not yet been released, but Ford Chief Operating Officer Jim Farley recently said he is seeing strong demand. By July 6, Ford will be up to full North American production.

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