Why Barra Listening to Trump Would Spell Disaster for GM

Jermaine Castillo
November 28, 2018

Donald Trump tweeted a warning shot across GM's front bumper Tuesday, threatening to pull all USA subsidies for America's largest automaker if its plans to slash jobs and production at North American plants prove to be a precursor to building interconnected electric cars in China.

General Motors Co said on Monday it will cut production of slow-selling models and slash its North American workforce in the face of a stagnant market for traditional gas-powered sedans, shifting more investment to electric and autonomous vehicles. According to The Washington Post, there were also concerns that automakers might not make as many cars in North America to export to China and elsewhere because costs would be higher in the USMCA region than making the vehicles in Asia since the Trump administration had introduced tariffs on China and closed a new US-Canada-Mexican deal.

Prices of GM stock dropped when the White House made the announcement, falling from $37.12 per share at 2 p.m.to $36.75 per share about 15 minutes later.

Barra also met at the White House with Trump's senior economic adviser Larry Kudlow, in what officials said was a previously scheduled meeting.

The closures also drew sharp criticism from the United States and Canadian labour union representing GM workers, which accused the company of shifting production overseas at the expense of North American workers. She's taking steps to prepare GM for the future of transportation: driverless cars, electric vehicles and ride sharing.

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The plant in Lordstown, Ohio, that makes the Chevrolet Cruze compact vehicle is on the possible closure list.

She said GM is still hiring people with expertise in software and electric and autonomous vehicles. In July 2017, speaking at a rally about 20 miles away in Youngstown (Ohio), Trump said he saw too many empty factories in the area and pledged to revive manufacturing there.

At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the US.

General Motors announcement immediately drew criticism from US President Donald Trump, highlighting the political risks facing GM.

General Motors benefits from a federal tax credit for electric vehicles, but the programme phases out after a manufacturer sells 200,000 cars.

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Trump scolded General Motors for investing in China and Mexico rather than the United States.

Barra said the automaker is running at about 70 percent capacity utilisation in North America, and the company will provide an update on how the latest moves will improve utilisation in January.

Those cuts are in addition to $6.5 billion that the company has announced by the end of this year. "It emphasizes what a precarious position the North American auto industry is in, and why we needed the changes that we see in the new NAFTA".

"I implore President Trump to keep his word when he came to the Mahoning Valley previous year and promised jobs were 'all coming back, '" he said in the press release.

GM will stop producing cars and transmissions at the plants through 2019.

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The automaker said it was ending Chevrolet Volt production because the vehicle was meant to be a bridge to fully electric cars when it was introduced about a decade ago.

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