Back in 2016, while on the campaign trail, Donald Trump made the following promise to Michigan’s automotive workers. “If I’m elected, you won’t lose one plant, you’ll have plants coming into this country, you’re going to have jobs again, you won’t lose one plant, I promise you that,” he said.
Well, General Motors announced today that, in spite of their recent profitability, they would soon be eliminating 15% of their salaried North American workforce, which comes to 14,700 people. And, making matters worse, the company also announced that factories will likely be closing in Michigan, Ohio, Maryland and Canada. The following background comes by way of USA Today.
…The Detroit-based automaker said it would end production by the end of 2019 at its Lordstown Assembly plant in northeast Ohio; its Detroit-Hamtramck Assembly plant in southeast Michigan; its Oshawa Assembly plant in Ontario; its Baltimore Operations parts plant; and its Warren Transmission Operations plant in southeast Michigan.
Assembly plants are job juggernauts. GM has about 1,500 employees at the Detroit plant, 1,600 at the Lordstown factory and 2,500 in Oshawa.
The announcement comes ahead of next year’s contract talks with the United Auto Workers union, which could potentially lead to decisions to devote vehicles to those facilities.
But there’s a serious chance that the plants close for good.
CEO Mary Barra is seeking to reposition GM for a future defined by self-driving cars, ride-sharing networks and electric vehicles…
So, here in Michigan, we could be losing 1,500 jobs at the Hamtramck Assembly plant, plus an additional 335 at the Warren Transmission Operations plant, bringing the total to 1,835. This number, of course, does not take into account all of the jobs in the supply chain that feeds those facilities, or the jobs in the surrounding communities that will be lost when these factories close.
GM, it’s worth noting, is not doing this out of necessity. The company reported a net income of $2.5 billion, or $1.75 a share, this most recent quarter, based on sales of $35.79 billion, which were up 6% from the same quarter last year. As GM said in their announcement today, they are making these cuts not to get back into the black, but to “increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis.” So these cuts, they’re estimating, will return an additional $6 billion a year to their shareholders.
It’s also worth noting that GM, a company that the American tax payers bailed out in 20011 to the tune of about $11.2 billion, announced no plans to shutter plants outside of North America. This fact, as you might imagine, didn’t exactly sit well with the United Auto Workers, whose members took significant pay cuts in 2011, when GM restructured in order to avoid total collapse.
UAW Vice President Terry Dittes had the following to say. “This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce,” he said. “GM’s production decisions, in light of employee concessions during the economic downturn and a taxpayer bailout from bankruptcy, puts profits before the working families of this country whose personal sacrifices stood with GM during those dark days. These decisions are a slap in the face to the memory and recall of that historical American made bailout.”
As for why this is happening now, GM CEO Mary Barra said that the company needed to do this in order to be “lean and agile,” so that they might “lead in autonomous and lead in electric vehicles.” And I suspect there’s quite a bit of truth in that, as ride-sharing platforms and the emergence of autonomous fleets are going to change the very foundation of the automotive business. [All of the automakers are attempting to transition from “car makers” to more broad “mobility” companies, but they’ll all still trying to figure out that that means.] With that said, though, one suspects there are other contributing factors at play… not the least of which is simple, straight-forward greed.
Here are just a few things to consider when thinking about today’s announcement.
First, as a result of the GOP’s corporate tax cut last year, GM says they’ve already benefited to the tune of $157 million. When Donald Trump and the Republicans sold this tax cut to the American people, they assured us that American companies would reinvest the money in their people and facilities. This tax cut, they told us, would, among other things, keep manufacturing jobs in America. They did not. And GM today joined the long list of U.S. companies that, having received these tremendous handouts from the government, turned around and laid off their workers, opting instead to pass the benefits of the tax cut along to their shareholders.
Second, it wasn’t just announced today that these five facilities would be closing, and that over 14 thousand people would be losing their jobs. It was also announced that, despite the talk about wanting to be a leader in the electric vehicle space, GM would be discontinuing its electric vehicle line, the Chevy Volt, shifting emphasis back to trucks and SUVs. Would this have happened if the current administration had taken climate change seriously, and kept the Obama administration’s fuel efficiency standards in place, instead of scrapping them, and doubling down on fossil fuels? I’m not sure. One suspects, however, that it contributed. [Asked earlier today by reporters about a new report issued by 13 federal agencies about the dire economic impacts of climate change, Donald Trump replied, “I don’t believe it.”]
Third, it couldn’t have hurt, I imagine, that Donald Trump’s tariffs on imported steel have already cost GM an estimated $1 billion.
Fourth, if I had to guess, I’d say that GM also chose to do this now, as they’re getting ready to renegotiate with the UAW next year, and it strengthens their position if their American factory workers know the company they work for doesn’t give a shit about them, as they can build vehicles much cheaper in China and Mexico.
I’ve yet to see what, if anything, our incredibly courageous Michigan Senators have to say about this, but Ohio Senator Sherrod Brown is speaking some serious truth today. [2,500 jobs are being lost at the Lordstown, Ohio plant, which you can see in the photo at the top of this post.]
GM owes the community answers on how the rest of the supply chain will be impacted & what consequences its disastrous decision will have on the Valley & Ohio. My office stands ready to do everything we can to help these workers. This decision is corporate greed at its worst. -SB
— Sherrod Brown (@SenSherrodBrown) November 26, 2018
