Barra Sends Renovators Packing As Cost-cutting Drive Continues

General Motors won’t move ahead with a planned expansion of its Warren, Michigan design center, nor will its Pontiac propulsion center get the makeover GM once favored. While a shiny new parking garage became a reality before CEO Mary Barra’s aggressive cost-cutting program could kibosh it, the automaker’s planned workforce reduction might render many of those parking spaces redundant.

A letter sent to employees detailing the deep-sixed renovations and expansions, obtained by Automotive News, was sent to GM employees on Wednesday. That’s the same day news broke of the automaker’s plan to offer buyouts to 18,000 salaried employees in North America. Globally, the offer’s on the table for nearly all executives with 12 years or more experience.

“Today, our structural costs are not aligned with the market realities nor the transformational priorities ahead,” Barra wrote in the letter. “We must take significant actions now to address this while our company and the economy are strong.”

The expansion of GM’s the Warren facility, part of a larger plan to refresh its tech campus, was to be in the order of 360,000 square feet. Ditching the project frees up cash flow for the bad times GM worries might lie ahead. Certainly, a stagnant new vehicle market and serious overseas pressures are already a reality.

Not that things are grim, financially, for GM. The company’s third-quarter earnings report glowed this week, showing a revenue increase of 6.4 percent and a net income of $2.5 billion. In her letter, Barra acknowledged that the company’s stable fiscal foundation might cause employees to wonder what all the fuss is about. The company’s “profitability is only part of what is required for our transformation,” she wrote, adding that GM needs to be seen — by investors — as preparing for future shocks and building resiliency.

Wednesday’s earnings report provided a much-needed lift to the company’s stock, which had trended downward since June.

a version of this article first appeared on thetruthaboutcars.com

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