Trump ramps up GM threats

General Motors To Close Ohio Plant, Thousands Affected

The moves are meant to shift resources to investing in electric and autonomous vehicles and to prepare for a downturn in the auto market, the automaker said.

Trump's threats come 16 months after Trump visited OH, a state he won in the 2016 election by more than 8 percentage points, and promised residents that their jobs are "all coming back".

What is driving this change, and why is General Motors taking these steps? Some 75 per cent of its global sales will come from just five vehicle architectures by the early 2020s, which means GM can reduce the people and capital required to keep its product portfolio updated.

GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors.

This time around, wrenching change in buyer behaviour could cost GM auto plants in Michigan, Ohio and Ontario their future. The company has invested in newer architectures for trucks and SUVs so it can cut capital spending while still raising investment in autonomous and electric vehicles.

Mr. Trump said Monday he is "not happy" with GM's decision and warned Ms. Barra to build another plant in OH soon.

But isn't the economy on solid footing? "I spoke with her and I said, 'This country has done a lot for General Motors - you'd better get back in there soon.' That's Ohio". Plants that will be "unallocated" in 2019 include Lordstown, as well as Detroit-Hamtramck in MI and Oshawa Assembly in Ontario, Canada.

Meanwhile, it's a fallacy to suggest that the new deal could have either prevented or ended up expediting the cuts, said Dan Ujczo, an OH trade lawyer who hails from Lordstown, the same community outside Cleveland that's home to one of the five GM plants where production is to cease next year.

GM's actions add up to the biggest restructuring for the U.S. No. 1 vehicle maker since its bankruptcy a decade ago, and mark a turning point for the North American auto industry.

The collapse in sales of compact and midsize sedans has hit certain GM models harder than rival Japanese brands. It's expected to reach that point by the end of this year.

When GM ended production of the Chevy Cobalt at Lordstown, it had already announced that the plant would be retooled for the Cruze.

Are other automakers planning similar cuts? By that schedule, GM would no longer qualify for the credit after the first quarter of 2020. Fiat Chrysler Automobiles got out of small and midsize cars two years ago, while Ford announced plans to shed all cars but the Mustang sports auto in the U.S. in the coming years. "General Motors' decision today. will not go unchallenged by the UAW", said Terry Dittes, the union's vice president in charge of negotiations with GM.

What will happen to the workers? The statement continued, "Many of the USA workers impacted by these actions will have the opportunity to shift to other GM plants where we will need more employees to support growth in trucks, crossovers and SUVs". Some will take buyouts while others will be laid off.

The company said the cuts - 2,500 jobs in Oshawa, GM's Canadian heartland, as well as 3,300 production workers in the USA and 8,000 salaried staff - are part of a dramatic course correction aimed at better positioning GM for the dominance of electrified, interconnected and automated automobiles.

Like Trump, Sen. Chris Van Hollen said in a statement that he was "deeply disappointed and frustrated" with the company. GM's major commodity costs are steel and aluminum, both of which have climbed in price in response to Trump's tariffs.

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