GM's cuts: Short term pain, long term gain.

GM recently announced that it will stop production at up to five plants in North America, including the Hamtramck assembly plant in Detroit and a transmission plant in suburban Warren. Hamtramck employs 1,542 workers, so a lot of families will be affected by this decision. In addition, some 8,000 salaried positions may be eliminated, many of them at GM’s Warren MI technical center. Some of the plants will likely be re-opened to produce new lines of vehicles, but when and at what level of capacity remains unknown.

Let’s look at this in context. The Detroit has added 4,500 manufacturing jobs in the past year, so even if neither of the Detroit area plants are reopened, the cuts amount to less than half of manufacturing job growth. Total cuts, including salaried positions amount to less than 0.5% of the Detroit MSA’s total employment.

GM, already a leader in autonomous and electric vehicles, is taking painful but necessary steps to position itself for the ongoing disruption in the automobile industry. Future job growth will not come from designing or manufacturing gas powered sedans. It will come from developing autonomous and electric vehicles and adapting to new technologies. Detroit’s recovery will continue, and more nimble and profitable automotive companies can be important contributors to it.

© John F. Martin/General Motors.

© John F. Martin/General Motors.