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
27 Comments
Sherrod Brown is still going.
“GM gained record tax breaks from the @GOP’s tax scam—and chose not to invest that money in American workers.
As a result of that corporate greed, thousands of workers will soon be out of a job.
Disgraceful.”
How many people do you know who bought or leased a new Chevy Cruze this year, not on friends and family plan? Come to think of it, how many people do you know who bought or leased a big 3 nameplate car (non SUV/CUV), non on a manufacturer employee, relative, friend, or supplier discount? I’m going to bet not many, and this is in Michigan. I wonder what that number would be if you lived in California, Texas, Florida, or New York?
I will not be buying any GM products. If companies had any fear that consumers would care and that there would be consequences, they wouldn’t do things like this. But American consumers are incredibly dumb and disconnected…and in Michigan they are the worst. None of this shit would ever happen if consumers had any sense or integrity.
We will see if Trump does anything to rectify this. My guess is that he’ll just tweet tough talk to keep his derp supporters convinced he’s their hero.
This year, General Motors received a $514 million tax break as a result of Trump’s tax giveaway to the wealthy. But instead of using that money to raise wages, increase benefits or add more jobs it is doing the exact opposite. Today, GM announced that it would be laying off nearly 15,000 workers and close plants in Michigan, Ohio and Maryland to “increase the long-term profit and cash generation” of the company. That is outrageous. Let’s be clear. GM is not a poor company. It is not going broke. So far this year, GM has made a profit of $6 billion and had enough money to spend $100 million on stock buybacks to enrich its wealthy shareholders. Last year, it gave its CEO a $22 million compensation package – 295 times more than the average GM worker makes. Under Trump, it has also received $600 million in lucrative federal contracts. Government contracts should be going to companies that create jobs in America, not to businesses that are eliminating them. The corporate greed of General Motors is destroying the social fabric of America.
I’m sick of hearing from Bernie Sanders at this point, but he’s right on.
I am deeply disappointed by the GM plant closures announcement today and the devastating impact it will have on our workers, their families and our communities. Michigan has the best autoworkers in the world and I know there’s no job that they can’t handle.
https://twitter.com/SenStabenow/status/1067228764680146946
As GM considers future investments and products, it is critical that those investments be made in Michigan – not overseas! And most importantly it is critical to find opportunities for the workers who’ve lost their jobs because of today’s announcement.
https://twitter.com/SenStabenow/status/1067228928513843201
Slate: “GM’s shift away from cars is not good news for pedestrians or the planet.”
Read more:
https://slate.trib.al/6Lny0ZI
Yes, this is horrible and an entirely predictable result of tax breaks is that the additional revenue will be funneled to the shareholders. Companies are now beholden to an expectation of quarterly profits that hampers their ability to invest in better products. At some point, this expectation will need to change if we are going to have a sustainable economy that supports domestic workers and the environment.
Which brings me to one correction: GM is discontinuing its hybrid vehicle production but has doubled down on its commitment to ALL electric vehicle and autonomous vehicle development. GM is not abandoning sustainable development in favor of SUV’s etc. It is continuing production of what sells and discontinuing what doesn’t. Unfortunately, GM trucks and suv’s are made abroad now by and large. And more unfortunately, the American people have not made the transition to sustainable vehicles. They will though. And the auto companies are betting on it. Technology not moralism moves humans to behavior change.It’s the nature of corporations to simultaneously look ahead and invest in the future while producing goods the public wants. We should take heart that the car companies have not given up on a fossil fuel free future. It’s inevitable. And it can’t come too soon.
Humans are greedy, not just corporations. Corporations are at least beholden to look 10 and 20 years ahead in developing their products. People and their choices directed this decision. Many of those people are workers as evidenced by the massive dually truck I saw yesterday with the personalized license plate: XpriusX. It simply didn’t work to shame suv owners. Shame creates inverse responses to those intended. I don’t know how to turn the tide on how stupid people are in their consumer choices, but cool new and sustainable technology seems to be our only hope in drawing their attention away from ever larger everything and towards some other shiny-bright, new, compact, yet functional and efficient object. PS our tvs and pcs are now in our pockets as evidence of that capacity.
It would be interesting to see how many domestic GM workers used their friends and family discount to purchase the Cruzes and Malibus they make v trucks and SUV’s they don’t. And to see how many voted for Trump…
I don’t think it is true that “GM trucks and suv’s are made abroad now by and large”–I think the remaining UAW jobs are predominantly making pickup trucks and SUVs.
Here is the current UAW-made auto product list from their website:
https://uaw.org/uaw-made/cars/
As to who autoworkers voted for, I don’t know who I would vote for if I was one–the screwing has been bi-partisan, starting with Bill Clinton and NAFTA and continuing through Obama and his intense efforts to pass the TPP (recall that the GM bailout commenced under Bush II–Obama continued it).
I know a lot of autoworkers used to use their discounts to buy cars for their kids going off to college, etc., and those were usually Cruz’s. etc. Of course today’s active autoworkers don’t make the money to afford new cars anymore (or college for their kids), so likely that has changed.
I read an interesting statement after the 2016 election from a retired Local UAW union President, who said–(paraphrasing)–“..,we always went with the Union, and the Union always endorsed the Democrats, but the Democrats gave away our jobs.”
Not really sure what to say–I drive a plug-in hybrid Chevrolet Volt–as I recall, you (Mark) purchased a non-plug in (non-hybrid?) made in Japan, Honda of some sort, because you wanted to “send a message” to the domestic auto companies about your environmental concerns.
Well, message sent, jobs lost…now you are suddenly upset about the jobs lost? Or surprised? Or what? Seems like a bit of crocodile tears–the one concrete thing you could have done to help with US jobs, you chose not to do.
At any rate, this I will link to article is interesting–GM apparently has spent about $14 Billion (with a “B”) of available cash over the last four years on buying back it’s own stock. Wowser.
https://wolfstreet.com/2018/11/26/gm-after-14-bn-share-buybacks-prepares-for-carmageddon-shift-to-evs-cuts-workers-closes-8-plants/
https://en.wikipedia.org/wiki/List_of_General_Motors_factories
Looks like all the big GM vehicles are made in Central and South America. That’s not the case for other domestic auto companies.
The UAW list and the wikipedia list don’t reconcile. I don’t have time to sleuth this, but would welcome anyone else’s follow through.
I will add that I don’t think foreign auto company competition is at all bad for US auto companies. I also support globalism generally on the grounds that people are people and all workers should be served by business and organize when not, but should not be pitted against one another. The story here is about corporations serving the shareholder class and their executives before workers of any stripe, and the general US consumer’s disinterest in letting go of gas-guzzling vehicles no matter the cost. I don’t buy new cars and I don’t buy my kids cars, and I live pretty well. I guess don’t see failure to be able to do so as a sign of economic desperation. The purchase or lease of a new vehicle seems like a luxury to me.
Sherrod Brown on the radio now saying that the Trump tax breaks created an incentive for car companies to move overseas. (a 50% tax break?) I missed the detail. But I’d like to know more. Work calls though…
https://www.freep.com/picture-gallery/news/local/michigan/2018/11/26/poletown-detroit-neighborhood-demolished-gm-plant/2115707002/
I don’t think it matters where a car is made. If all cars were made in the US, they would be of poor quality and very expensive (as they used to be).
A better car for less money means that I drive that car for longer and have money left over to spend on other things, some of which I might only be able to get locally.
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. 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. 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!
I honestly don’t have any problems with consumers buying whatever is the best vehicle for them. I also expect any business to put their profits over the well-being of their employees. It is the government and unions who need to look out for workers. On that note, just about the worst thing a government can do IMHO is to give huge tax breaks to corporations in order to create or keep jobs unless there is some kind of contract that would guarantee those jobs. Rather, we should be taxing companies more heavily and using that money to fund some kind of basic income.
People who want to blame consumers for job losses and stagnant wages are doing it wrong.
Anonymous– Agreed, but I feel totally ok blaming US consumerism (aka consumers) for their part in our failure to adequately address climate change. Seem like that problem is one of many small actions from many quarters, and the answer to it could look similar. Unless we invent some awesome CO2 recapture technology in time– which we could do, if only to be able to continue on otherwise as we have, endlessly.
Reaping the rewards of 50 yrs of union busting. Any union member who ever voted Republican and simultaneously sported a “out of a job yet, keep buying foreign” bumper sticker should be buried in an ant hill and covered in honey. It would look like Arlington cemetery, row after row of folks who fell for the fascist Kool aid.
Mark is right that it’s a total dick move on Mary Barras part going into contract negotiations. But it’s the abandonment of the labor first culture that let’s her think she’ll get away with it.
Why wouldn’t she go to her Union Council first thing and outline the big picture goals and work together towards those goals and also minimizing disruption to employees and communities? Because we let them get away with it over and over.
It’s more than just the cars themselves.
https://jalopnik.com/making-good-cars-isnt-enough-1830678090/amp
Yes, VerifyFirst, I did buy a Honda hybrid, and I’ve been open about it on this site. As I’ve explained, I did so because there were no domestic automakers selling them at the time. He’s something I posted here back in 2013.
“…In September of 2002, I purchased my first, and only, brand new car. I’d always told myself that I’d never buy a new car… as new cars, as we all know, are for suckers… but my old Jeep, which was built from salvaged parts by the kids in a rural Kentucky auto shop class, was on its last legs, and I wanted to demonstrate to the powers that be that there was a market here in U.S. for hybrids. If you can remember back to 2002, there weren’t very many hybrids on the roads, and the analysts were all wondering if they’d actually sell here, as the American people, despite global warming and peak oil, only seemed to want SUVs, which were becoming more obnoxious and ridiculous by the season. (I believe that it was around this time that Cadillac began incorporating “power-retractable assist steps” in their models, as the monstrosities they were creating had grown too large for people to actually enter without robotic assistance.) I called all of the domestic automakers, asking if they would be bringing hybrids to market anytime soon, and I ws told that none of them were. Honda and Toyota, however, had new models on the market, and I chose the Honda Civic Hybrid, which I’m still driving today, 11 years later…”
Jean, I didn’t mean to imply that they were cutting all electric vehicle programs, simply that they were killing the Volt, and apparently doubling down on their SUV and truck lines.
I think it’s important to note that corporations are beholden to both acknowledge present market realities and prepare for the future, in this case, a fossil fuel free future and domestic car companies appear to be doing that at last.
Jean, corporations should also be beholding to the communities that provide the labor and consumers for their products. How did we get to a place where corporations have all the rights of an individual with none of the civic responsibility? What Mary Barra should be asking is “how would Jesus implement a corporate modernization initiative?”