General Motors spikes after announcing plans to idle 3 North American factories and slash 15% of its salaried workforce

  • General Motors on Monday announced plans to halt productions at three factories in North America and to close two propulsion-component plants in the US.
  • The company also said it will reduce the size of its global workforce by 15%, including a 25% cut in white-collar staff.
  • The moves are intended to shift resources to investing in electric and autonomous vehicles and to prepare for a downturn in the auto market, the automaker said.
  • Watch General Motors trade live.

General Motors rallied as much as 8% Monday after announcing plans to stop producing vehicles at three factories in North America and to cut its salaried employees by 15% next year.

GM shares were trading around $37.78 as of 3:35 ET on Monday. In late October shares were trading below $32.

GM said its Oshawa Assembly plant in Oshawa, Ontario, its Detroit-Hamtramck Assembly plant in Michigan, and its Lordstown Assembly plant in Warren, Ohio, would be "unallocated" by the end of 2019 as it reorganized its manufacturing capacity to focus on electric and self-driving cars and in anticipation of a downturn in the auto market.

Additionally, the automaker said that it would shut down its propulsion-component plants in Maryland and Michigan, and idle two additional, unnamed assembly plants outside the US. GM will also reduce the size of its total workforce by 15%, including a 25% cut in its white-collar staff.

RELATED: Take a look at General Motors plants around the world: 

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General Motors plants around the world
The GM logo is seen at the General Motors Assembly Plant in Ramos Arizpe, in Coahuila state, Mexico November 25, 2017. REUTERS/Daniel Becerril
The employee parking lot of the General Motors Co (GM) CAMI assembly plant remains empty during a strike by the Unifor auto workers union in Ingersoll, Ontario, Canada October 13, 2017. REUTERS/Chris Helgren
Workers inspect Baojun E100 all-electric battery cars at a final assembly plant operated by General Motors Co and its local joint-venture partners in Liuzhou, Guangxi Zhuang Autonomous Region, China, December 27, 2017. Picture taken December 27, 2017. REUTERS/Aly Song
An employe of DHL company (yellow vest) works inside a Baojun car final assembly plant operated by General Motors Co. and its local joint-venture partners in Liuzhou, Guangxi Zhuang Autonomous Region, China, December 27, 2017. Picture taken December 27, 2017. REUTERS/Aly Song
A worker driving a GMC Terrain leaves the General Motors CAMI car assembly plant where the GMC Terrain and Chevrolet Equinox are built, in Ingersoll, Ontario, Canada, January 27, 2017. REUTERS/Geoff Robins
Workers assemble Chevy Bolt EV cars at the General Motors assembly plant in Orion Township, Michigan, U.S. November 4, 2016. REUTERS/Joe White
Employees inspect vehicle frames in the weld shop at the SAIC-GM-Wuling Automobile Co. Baojun Base plant, a joint venture between SAIC Motor Corp., General Motors Co. and Liuzhou Wuling Automobile Industry Co., in Liuzhou, Guangxi province, China, on Wednesday, May 23, 2018. GM and its partners sold 4 million vehicles in China in 2017, about 1 million more than the automaker sold in the U.S. Photographer: Qilai Shen/Bloomberg via Getty Images
An employee walks past vehicles in the general assembly shop at the SAIC-GM-Wuling Automobile Co. Baojun Base plant, a joint venture between SAIC Motor Corp., General Motors Co. and Liuzhou Wuling Automobile Industry Co., in Liuzhou, Guangxi province, China, on Wednesday, May 23, 2018. GM and its partners sold 4 million vehicles in China in 2017, about 1 million more than the automaker sold in the U.S. Photographer: Qilai Shen/Bloomberg via Getty Images
Robotic arms weld vehicle frames in the weld shop at the SAIC-GM-Wuling Automobile Co. Baojun Base plant, a joint venture between SAIC Motor Corp., General Motors Co. and Liuzhou Wuling Automobile Industry Co., in Liuzhou, Guangxi province, China, on Wednesday, May 23, 2018. GM and its partners sold 4 million vehicles in China in 2017, about 1 million more than the automaker sold in the U.S. Photographer: Qilai Shen/Bloomberg via Getty Images
A Chevrolet Sonic vehicle moves along the production line at the General Motors Co. Orion Assembly Plant in Orion Township, Michigan, U.S., on Tuesday, June 13, 2017. The largest U.S. automaker will expand its fleet of autonomous Chevrolet Bolts to 180 of the electric vehicles, Chief Executive Officer�Mary Barra�said Tuesday.�Photographer: Jeff Kowalsky/Bloomberg via Getty Images
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All these actions are expected to increase GM's annual adjusted automotive free cash flow by $6 billion on a run-rate basis by year-end 2020, according to the company.

"The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future," CEO Mary Barra said in the press release.

"We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success."

The news wasn't entirely surprising. GM curtailed manufacturing operations in South Korea earlier this year, and the idling of the Oshawa plant had been widely reported in the Canadian press as under discussion.

It also exited the European market in 2017 by selling its Opel-Vauxhall division to Peugeot; ceased manufacturing of vehicles in Australia; and has been aggressively investing in autonomous vehicles through its Cruise division — through which it intends to launch 20 new electrified vehicles by 2023.

"We started this transformation in 2015," Barra said in a conference call with reporters to announce the moves, "Now we're accelerating and picking up the pace."

General Motors was down 9% this year.

Matthew DeBord contributed reporting.

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