GM Announces Layoffs of 1,000 Employees While Preparing for Record Profits

MJP –

General Motors laid off approximately 1,000 workers last Friday, with employees reportedly notified via early morning emails.

The cuts affected both salaried and hourly staff, including some United Auto Workers (UAW) members. A majority of the layoffs were concentrated at GM’s Global Technical Center in Warren, Michigan, according to the Detroit Free Press.

Layoffs amid record profits

News of the layoffs comes alongside GM’s decision to shutter operations at its Yuma, Arizona proving grounds—used for hot-weather testing— and its Durability, Corrosion, and Teardown facilities at its Milford Proving Grounds complex located just outside of Detroit. In a statement to the Detroit Free Press , the company said that it is working to “optimize for speed and excellence.”

The layoffs have drawn backlash from the UAW. “GM is trying to cut around 50 UAW jobs when they’re making record profits. We will fight for our laid-off members with the full force of our contract,” UAW Vice President for the General Motors Department, Mike Booth, said in a statement.

Bouncing back from costly strikes

Even before the cost-cutting measures, GM was already on track to surpass its 2022 record profit of $14.5 billion. The company’s third-quarter results were strong, with an adjusted profit of $3.4 billion, a $200 million increase from the same period last year.

Last year, a UAW strike demanding pay increases cost GM an estimated $1.1 billion, according to the company. During the strike, GM argued that meeting union wage demands would hurt its ability to compete with nonunion automakers. However, the company eventually agreed to an immediate 11% pay raise for workers, with additional increases set to boost wages by at least 14% over the next four years.

The UAW rallied behind variations of the slogan, “Record profits mean record contracts,” and their efforts paid off. The resulting agreement secured the largest wage increases the union has ever achieved at GM. Despite GM’s claims about its inability to meet the union’s wage demands, it was already on track to hit record profits this year before the most recent layoffs were announced.

A mixed future for GM

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While GM’s profits soar, its challenges are mounting. Sales in China, once its largest market, dropped by 37% in the third quarter due to stiff competition from local automakers and challenging economic conditions. Back home, news of the incoming Trump administration’s plans to cut the federal EV credit has put GM’s growing EV sales under threat.

These layoffs follow another round in August, which saw 1,500 jobs cut, many tied to GM’s technical center in Warren, Michigan.

Final thoughts

With rising competition in China and softening EV demand in the U.S., GM is working to reduce costs—even though it’s already on track to hit record profits this year.

But, with the company just a year out from the last UAW strike, it needs to be careful in exactly how it goes about cutting costs if it doesn’t want to incite a bigger response from the union.