Our New York correspondent reports that President Trump has told GM (General Motors) it had “better get back [to Ohio] soon” after the company said it will shut five factories in the US and Canada and eliminate about 14,000 jobs, more than 10% of its North American work force.
The churlish Trump has also threatened to cut off the company’s supply of government subsidies.
He’s obviously rankled that the GM decision may remind voters of his election promises to regenerate the auto industry. It will expose, too, the economic folly of his trade warring.
GM says the decision is a response to a slowdown in new-car sales, as consumers prefer sport-utility vehicles and smaller trucks in response to low gasoline prices
It will drop several models while moving to compact cars and a plug-in hybrid, likely overturning -parts supply chains and portending big shifts in auto manufacturing strategies and the US industrial economy.
The company will close assembly plants in Ohio, Michigan and Ontario, and two smaller transmission factories, cutting off significant demand for materials and parts.
The decision has triggered a political uproar over the impact of tariffs on GM’s costs, but the company says its goal is streamlining its core business while gaining room to invest in new technology like electric and self-driving vehicles.
CEO Mary Barra said no single event prompted the cuts.
But according to a report in Vanity Fair, some of the factors that clearly led to the retrenchment include a slowdown in new car sales, bets on smaller vehicles not panning out, and the president’s trade war, which has spiked the price of steel, and which GM warned in June would impact its profits and US jobs.
In short, the move was a logical decision that you might expect someone like Donald Trump, a self-described businessman who claims to know “more about” money, taxes, trading, banking, and the economy than anyone, to understand.
But, of course, Trump is only a businessman in so much as he played one on TV—his real-life accomplishments are more along the lines of bankrupting a casino and receiving a lifetime allowance from his father, who had to bail him out on numerous occasions.
Which is why, instead of saying that he was disappointed about the news but understood that G.M. was in a tough position and, hey, maybe in retrospect it was silly to promise auto-manufacturing jobs were “coming back,” or to pass a tax bill that incentivized companies to send jobs and factories abroad, Trump told a reporter that G.M. “better damn well open a new plant there very quickly,” that the company is “playing around with the wrong person,” and that Barra will have “a problem” if she doesn’t immediately open a new facility.
On Tuesday, still fuming, Trump twittered:
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!
In short, Trump is threatening to punish a private company for making a decision based on market realities that he to some extent created.
The Vanity Fair report goes on:
But the whole thing takes on some extra hilarity when you realize, for the 927th time this year, what this not-at-all-smart guy is unintentionally proposing. As Dan Primack points out, subsidies for G.M.-specific electric vehicles do not exist. Rather, there are industry-wide federal tax credits of up to $7,500 available for purchasers of U.S. electric cars, with “aggregate caps of 200,000 vehicles per manufacturer.” In other words, getting rid of the subsidy in its current form would hurt both American consumers and other auto manufacturers.
Vanity Fair reminds its readers this isn’t the first time Trump has threatened to destroy a company for making a business decision.
Over the summer, in a series of escalating tweets,
… the president went full Fatal Attraction on Harley-Davidson, essentially threatening to annihilate the company for moving some production overseas after he’d supposedly done “so much for [it].”
Now let’s wait for NZ to become a republic and Shane Jones to become President, similarly flexing his muscle to force the obeisance of Air New Zealand, Fonterra and whichever other company happens to be peeving him today.