General Motors (GM +2.2%) is out with its transformation plan for the future.
The company says its aims to strengthen its core business, capitalize on the future of personal mobility and drive significant cost efficiencies. Run-rate cash savings of ~$6B per year are anticipated by the end of 2020.
On strategy: "GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade."
On production: "Assembly plants that will be unallocated in 2019 include Oshawa Assembly in Oshawa, Ontario, Detroit-Hamtramck Assembly in Detroit and Lordstown Assembly in Warren, Ohio. In addition, GM will cease the operations of two additional plants outside North America by the end of 2019."
On staffing: "The company is transforming its global workforce to ensure it has the right skill sets for today and the future, while driving efficiencies through the utilization of best-in-class tools. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making."
On accounting: "GM expects to record pre-tax charges of $3.0 billion to $3.8 billion related to these actions, including up to $1.8 billion of non-cash accelerated asset write-downs and pension charges, and up to $2.0 billion of employee-related and other cash-based expenses. The majority of these charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes. The majority of these charges will be incurred in the fourth quarter of 2018 and first quarter of 2019, with some additional costs incurred through the remainder of 2019."