On Monday, GM made an announcement that rattled Wall Street, automotive analysts, its own workforce, and President Trump .
A day after the car manufacturer announced plans to close factories in Michigan, Ohio, Maryland, and Oshawa, Ontario, Trump threatened on Twitter Tuesday afternoon to take away GM’s federal electric car subsidies, which it uses to help customers offset the costs of buying electric vehicles.
“We are now looking at cutting all @GM subsidies,” the president tweeted. “Including for electric cars. 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!”
In total, GM’s decision Monday will axe roughly 14,200 employees in North America, made up of 8,000 white-collar jobs and about 6,200 factory jobs. Those figures don’t take into account the thousands of supplier and other spin-off jobs that will be affected by the closures.
GM also announced Monday that it would stop making a number of its car models, from the Chevy Volt to the Cadillac CT6, in favor of advancing a strategy that revolves around trucks and SUVs, which remain wildly popular around the world. The company is also focusing on autonomous vehicles and mobility services, and electric cars, CEO Mary Barra said.
It was a head-spinning turn of events early this week as more details emerged and sparked a variety of reactions.
Investors seemed to respond positively at first, as (NYSE: GM) stock prices rose throughout Monday morning, up more than 6 percent by midday in New York. But those gains reversed by the end of trading on Tuesday, with shares at market close trading at $36.69 each, down 2.5 percent from Monday’s close of $37.65 per share.
“Monday’s announcement changes the narrative on GM and will shift the focus toward ‘Future GM,’ especially the Cruise autonomous vehicle division,” said auto analyst Jim Collins in a note published Monday. He declared Barra—“a breath of fresh air”—and GM’s South Korean competitors the winners of the day, and said rental car companies, U.S.-based suppliers, and employees belonging to the United Auto Workers union were the losers. The news may not bode very well for the U.S. economy and its workers, either.
Even before his threat to cut GM’s subsidies, President Trump was among those who viscerally disliked the company’s announcement. He told The Wall Street Journal that GM should stop making cars in China and Mexico instead, and seemed to take particular umbrage at the closing of GM’s Ohio operations—a state that happened to be crucial to his 2016 election victory.
“They better damn well open a new plant there very quickly,” Trump told the publication, adding, “I love Ohio.”
He also insinuated that because a bailout by U.S. taxpayers helped keep GM afloat during the recession—a move that arguably had more to do with preserving the country’s economy than rescuing an individual company—GM owed the American people jobs and factories.
America’s workers, or at least those employed by GM, were similarly dismayed by Monday’s announcement, according to local reports. Many expressed shock and betrayal. The news was all the more gut-wrenching coming so close to the holidays.
Some pundits blamed Trump’s tariffs for GM’s decision, but Kristin Dziczek, the Center for Automotive Research’s vice president of industry, labor, and economics, told the Detroit Free Press she doubted the tariffs were a big factor. … Next Page »