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GM preparing for potential downturn with restructuring, CEO says

The head of General Motors Co. said at an automotive industry event in Detroit on Jan. 16 that the company chose to restructure in a strong economy as preparation for the next potential downturn, owing to the cyclical nature of its business.

GM CEO and Chairman Mary Barra said during a session at the Automotive News World Congress that the industry will change more in the next few years than in the past 50 years combined, and the company needed to make sure every investment generates the right return.

"Having been at General Motors for 38 years, I feel a huge obligation to make sure General Motors isn't just successful for a few years, but I want it to be successful for many, many decades," Barra said.

The executive said the company was motivated to make changes when customer preferences began shifting from sedans to crossovers, SUVs and trucks.

Those changes materialized Nov. 26, 2018, when GM announced it was cutting sedan production on certain models and reducing staff, with a plan to cut up to 14,000 jobs across its blue-collar and white-collar workforce. The restructuring included closing plants in Ohio, Michigan, Maryland and Canada, affecting 2,800 hourly workers.

"We knew we needed to make that change," Barra said. "We timed it because we thought it provided the best opportunities for our employees" to find other jobs.

The CEO said she understood the emotional impact, having experienced a plant closure while working her first job at a Pontiac factory. However, Barra said workers affected by the current closures had 2,700 job opportunities available at other GM locations in the U.S. In addition, 1,200 of those workers were eligible for retirement.

"We've already had 1,500 volunteer for new positions, and 700 are on their way," Barra said.

For the fewer than 1,500 workers impacted in Canada, Barra said GM was working with the local government, community colleges and businesses to help create opportunities for them.

Barra said it was better to make such changes ahead of a market shift so that affected employees had more alternative opportunities and the company was prepared for any future downturn.

"I think, right now, an industry issue is this concern about the cycle," the CEO said, referring to a cyclical industry and market.

"We understand we're in a cyclical business, and there will come a time where there will be a downturn," Barra said. "We have to make sure we can demonstrate that not only will we persevere through that, but outperform and be able to invest in the product portfolio."

Also during the session at the Detroit event, Barra addressed questions about the possibility of a public listing for GM Cruise LLC, the self-driving car unit that was acquired in 2016.

Barra said GM plans to keep Cruise private and as part of the automaker while both divisions work on autonomous-vehicle technology and how to safely deploy it.

"We are unique in the way we're approaching autonomous vehicles because we have all the pieces under one roof," the CEO said. "We're never getting into the conversations of who owns what, or whose rights are this everybody is working full speed on getting the technology out."

Once GM and Cruise deploy the technology, Barra said they would see how to best maximize long-term value for shareholders.