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Layoff and Innovation in General Motors

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Case Study: Layoff and Innovation in General Motors

Samyek Man Singh

Westcliff University

BUS 540 Organizational Behavior

Prof. Steve Hawn

July 29, 2019


Case Study: Layoff and Innovation in General Motors

        General Motors Company, also called GM is the multinational company with its headquarters situated in the heart of Detroit, Renaissance Center. The corporation that designs, produces, manufactures then markets and distributes automobiles and its spares across the world was no doubt one in the top ten of the Fortune 500 list in accordance to its revenue. It has in effect been supplying vehicles to more than 35 nations all other the world.

        After serving for about 100 years in the automobile industry, GM was forced to announce the layoff of close to 15000 employees, 14700 to be exact. There seems to be around 8000 white collar workers among this number as well. Due to unavoidable circumstances and to keep in pace with the market, GM had to make this move. As GM is responsible for mainly sedans, its highest production in quantity are sedans which contain internal combustion engines, however sadly for GM, the market has shifted its focus in the short term on SUVs and in the long term electric and autonomous vehicles.

        The plants that are to be shut by the end of 2019 include Detriot, Ohio, Oshawa, and Ontario, including a few transmission factories in locations such as Warren, Michigan and Baltimore. The reason the plants are being forced to close is that these produce internal combusting engine containing the line of sedans. Another reason is also the fact that the demand for SUVs had drastically increased in the line, whereas the sedans aren’t that very demanded according to recent market research.

        This move for GM is a new step towards innovation which is definitely a catalyst for growths in organizations. In November 2018, GM introduced its ground-breaking concepts and cutting edge technology in Shanghai showcasing the ultimate goal of transportation, with zero emission, zero crashes and zero congestion. To make all these possible GM has also announced that after shutting down its production units in North America they will open up units in Mexico and the People’s Republic of China.

        GM has claimed it was save billions in expenses after the downsizing move and shutting of those production units. Not only expenses GM has predicted more saving in future units as the raw materials and labor costs will be significantly cheaper in China and Mexico.

Events that lead to closing factories; downsizing

        Humans do not separate rational decision making when it comes to emotions and hence the GM layoff of that many employees caused a stir. However looking at it from the company’s point of view and a practical point of view it was the right decision. As it is organizational downsizing is done in the favor of the organization to increase its performance in the long run (Sheaffer, Carmeli, Steiner-Revivo, & Zionit, 2009). Henceforth elaborated:

  1. Demand of the Market: As mentioned before the sedans being produced there were not exactly as demanded as compared to the SUVs in the current market. And the company trends had suggested that the production of sedans would be more of a dead stock in the future relatively comparing to the demand of SUVs.

  1. To keep up with competition: The competitors in the market were moving to another trend of automation and electric motors. GM was involved in their research and design but not yet inclined towards the production of such a line. So as they had introduced in the Shanghai fair, they were moving towards producing such model in the near future.

  1. Cost Reduction: Companies use many other strategies to reduce their costs and GM used the most prompt way to reduce the costs, downsizing. They aimed at saving up to $5-$6 billion dollars with this and in addition, the shift of production units to China and Mexico as he labor costs is low and the raw materials are also cheaper.
  1. Increasing Capital:

Responses from the company, the community and the employees

Personal Opinion regarding this case

Innovation and General Motors

Industrial examples supporting this argument


Personalized CLO Applied Learning Assignment


 Summary of the article:  The article for this write up is - Layoffs, Coping, and Commitment: Impact of Layoffs on Employees and Strategies Used in Coping with Layoffs. This article talks about why organizations are afflicted by layoffs in order to minimize their expenses and bring about changes in the organization. It then goes on to discuss the effects faced by the ones laid-off and how they recoup from such situations. The General Motors example is one good example of employee lay-off as it shut 5 plants in North America which let to downscaling by laying off around 15000 employees. Their motive to do so was to shift those facilities to Mexico and China as they offered low labor and material costs and also due to the fact that the American government had put up new policies that increased the companies expenses.



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