President Donald Trump threatened to punish General Motors following the company’s decision to shutter Midwest manufacturing plants and lay off thousands of U.S. workers.
A day after the news of the layoffs rattled the industry and raised a potential political problem for the president, the president followed up on an earlier threat that the automaker ‘better damn well’ open a new plant.
He threatened to yank subsidies for electric cars – as GM seeks to reconfigure its supply chain, jettison unpopular models, and refocus on vehicles it thinks will sell in the future.
‘Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China,’ Trump tweeted Tuesday while a televised White House press briefing was going on.
‘The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including…. for electric cars,’ he continued.
President Donald Trump scolded Genetal Motors CEO Mary Barra on Monday, saying she must reopen an Ohio auto plant scheduled for closure; Ohio is a missionj-critical state for the president to win if he hopes to be re-elected in 2020
‘General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!’ Trump added.
His economic advisor, Lawrence Kudlow, hinted at the threat during his own appearance in the briefing room: ‘It seems like GM would rather build its electric cars in China rather than in the United States. We are going to be looking at certain subsidies regarding electric cars and others, whether they should apply or not. I can’t say anything final about that,’ Kudlow said.
Asked about the move, White House press secretary Sarah Sanders said: ‘I don’t know that there’s a specific timeline. As he said, he’s looking into what those options might look like. The president wants to see American companies build cars here in America, not build them overseas. And he is hopeful that GM will continue to do that here.’
THREAT: Trump said he was ‘very disappointed’ with GM’s plant closures
The president threatened to end subsidies for GM’s production of electric cars
Some of subsidies for that prop up the industry include tax credits of up to $7,500 for new electric vehicles purchased in the U.S., based on battery capacity and other factors. It is limited to 200,000 vehicles per manufacturer, according to the Energy Department.
Those subsidies, which accrue to individual taxpayers, were enacted by Congress in 2008 and couldn’t be ended unilaterally by the president. It wasn’t immediately clear whether Trump had other subsidies in mind. They have contributed to growth in the hybrid, electric industry, where Japan is a leader and U.S. manufacturers are trying to compete.
The company’s stock took an immediate drop at 2:05 pm, when Trump sent out his tweet threatening subsidies. It was down 42 cents within five minutes, and down nearly 60 cents per share within half an hour, having risen the day the company announced layoffs.
Trump fired off his tweets while a White House briefing was ongoing
An angry President Donald Trump lashed out at General Motors on Monday following the company’s announcement that it would close five auto plants and put 14,700 people out of work – some of whom will be voters in the politically crucial state of Ohio.
Plants would close near Detroit, in Ohio, and near Toronto.
He told The Wall Street Journal that the company should stop making cars in China, and instead bring its American factories up to full capacity.
‘They better damn well open a new plant there very quickly,’ the president said, adding: ‘I love Ohio.’
GM will stop producing cars and transmissions at the plants through 2019. In all, six car models were scrapped – the Chevrolet Volt, Chevrolet Cruze, Chevrolet Impala full-size car, Cadillac XTS, Buick LaCrosse and Cadillac CT6.
This leaves the company with nine remaining car models.
And the Cadillac CT6 will be killed off in the U.S. after mid-2019, though it will continue to be sold in China.
Trump said he spoke Monday with GM’s CEO, Mary Barra, and ‘I told them, ‘you’re playing around with the wrong person’.’
He told reporters as he left the White House for a pair of political rallies in Mississippi that the United States ‘has done a lot for General Motors. They better get back to Ohio, and soon.’
The president won the Buckeye State by 8 percentage points in 2016; his re-election push is likely to focus on a strengthened economic recovery.
The General Motors Lordstown Complex in Warren, Ohio is the main assemply plant for the compact Chevy Cruze model, which the company is phasing out due to poor sales
POLITICS: Dave Green, president of United Auto Workers Local 1112, posed at union headquarters in Lordstown, Ohio in June; his union endorsed a Democratic senator who won re-election in a state Trump needs to rally back to his side
Given Demorcats’ built-in advantages in the Electoral College, the proportional voting scheme that actually elects U.S. presidents, it’s difficult for Republicans to win without prevailing in Ohio.
In addition to trimming its workforce, GM said Monday that it would eliminate some models whose sales have underperformed expectations.
One of those, the Chevy Cruze, is asembled at the Lordstown, Ohio plant that’s now scheduled for mothballs.
Trump told reporters that Barra had told him the elimination of the Cruze had ‘nothing to do with tariffs’ – only with slumping sales.
His response, he said, was that she should ‘get a car that is selling well and put it back in [Ohio].’
‘I am not happy with what she did,’ Trump said of Barra. ‘You know, the United States saved General Motors, and for her to take that company out of Ohio is not good.’
This map shows votes in the Electoral College that went to Donald Trump (in red) and Hillary Clinton (in blue) in 2016; the ‘electors,’ who actually choose the president, are re-apportioned to the states once per decade as part of the U.S. Census, and Republicans traditionally need Ohio’s 18 votes (black arrow above) to win the White House
About 6,000 factory workers (pictured at the Oshawa plant) could lose jobs in the US and Canada, although some could transfer to truck plants. The plan will help save the company $6 billion by 2020, according to GM
GM’s plant-closure restructuring is aimed at saving $6 billion as the company shifts its focus to electric and autonomous cars.
In addition to the Ohio plant, it will close two in metro Detroit and one in Ontario, Canada.
Too many of its factories are only set up to make older models while GM wants to reshape to focus on lower emitting hybrid vehicles.
GM Chairman and CEO Mary Barra said that the savings were necessary to be able to invest in the future.
‘What we’re doing is transforming this company,’ Barra told the Detroit Free Press. ‘This industry is changing very rapidly when you look at propulsion, autonomous driving and ride sharing. We want to be in front of it while the company is strong and the economy is strong,’ she said.
The move won’t affect GM’s core products such as its pickups, SUVs and certain cars including its full-sized 2019 Chevrolet Silverado and GMC Sierra pickups.
‘Those are good architectures from a fuel economy perspective … we’ll continue to put those in the market, but we can take down our capital expenditures, while investing in electric and autonomous vehicles,’ said Barra. ‘You will see a greater share invested in autonomous and electric vehicles, both from a capital expenditure and’ increased hiring for electric and self-driving engineering jobs.
GM will lay off 14,700 factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles. One of those closures would be the Oshawa plant in Canada (pictured)
In a press statement, the company said it will close the Detroit-Hamtramck Assembly Plant in Detroit and Warren Transmission Operations in Warren.
Other plants closing include the Oshawa Assembly Plant in Oshawa, Ontario, the Lordstown Assembly in Warren, Ohio, and the Baltimore Operations in White Marsh, Maryland.
The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse.
‘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,’ said GM Chairman and CEO Mary Barra.
‘We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.’
The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Most of the affected factories build cars that won’t be sold in the US after next year.
They could close or they could get different vehicles to build. They will be part of contract talks with the United Auto Workers union next year.
About 6,000 factory workers could lose jobs in the US and Canada, although some could transfer to truck plants.
The plan will help save the company $6billion by 2020, according to GM.
The announcement is the biggest restructuring in North America for the US No. 1 carmaker since its bankruptcy a decade ago.
The Monday closure of GM’s plant in Oshawa, Ontario, was confirmed late Sunday by an official familiar with the decision.
GM opened its factory in Oshawa, near Toronto, in 1953. The plant is used to make the Cadillac XTS and Chevrolet Impala sedans as well as the Chevrolet Silverado and GMC Sierra trucks.
The company has three other sites in the province of Ontario. It is unclear whether they will also be affected
GM needs to reshape the company as it shifts its focus to lower emitting hybrid vehicles, technology that is not at the forefront at the Canadian plant.
Too many GM factories are devoted to making slow-selling cars and the company can no longer afford to keep them all operating without making some tough decisions. But the political atmosphere might limit realistic choices for the Detroit automaker.
In a press statement, GM officials announced the closure of Lordstown Assembly (pictured) in Warren, Ohio
The company will also close the Detroit-Hamtramck Assembly Plant (pictured) in Detroit
The company said that the moves will help continue its focus on crossovers, SUVs and trucks.
With the move, GM plans to cut 25 per cent of the executive staff and 15 per cent of the salaried and salaried contract staff.
‘These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle,’ Barra said in the statement.
The closure of the Lordstown plant in Ohio didn’t shock some analysts who predicted that location as one of GM’s targets.
The car produced there is also is built in Mexico. The once-bustling factory already has lost two of its three shifts and 3,000 union jobs since the beginning of last year.
Barra did not link the cuts announced Monday to tariff pressures, but said trade costs are among the ‘headwinds’ GM has to face as it deals with broader technology change and market shifts.
With US car sales lagging, several car plants have fallen to just one shift, including its Hamtramck and Lordstown, assembly plant.
A rule of thumb for the automotive industry is that if a plant is running below 80 per cent of production capacity, it is losing money.
GM has several plants running well below that. Consultancy LMC estimates that Lordstown will operate at just 31 per cent of production capacity in 2018.
Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed US car production. Ford said in April it planned to stop building nearly all cars in North America.
The industrywide slowdown in passenger car sales started to pick up steam in 2017.