“GM is committed to maintaining a strong manufacturing presence in the U.S., as evidenced by our more than $22 billion investments in U.S. operations since 2009,” GM said today in response to public remarks and a phone call by U.S. President Donald Trump yesterday.
This was after its actions yesterday revealed the weakness – if not downright falsity – of President ‘trade war’ Trump’s claim to be creating jobs… “We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing.”
Commerce Dept. hearing July 2018: Autoworkers Protest Job-Destroying Trump trade war tariffs.
Trump was probably out playing golf after a several fatiguing days denying a sobering report – he said that he looked at part of it – put out by his own Administration on Black Friday eve about the catastrophic effects coming from climate change. It appears that once again Trump’s attempt at a coverup actually made things worse in the Russion roulette game his mis-administration is playing.
GM also claimed that, “Yesterday’s announcements support our ability to invest for future growth and position the company for long-term success and maintain and grow American jobs.
“Many of the U.S. 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. GM’s transformation also includes adding technical and engineering jobs to support the future of mobility, such as new jobs in electrification and autonomous vehicles.”
Well yes, but GM is also maximizing profits here as the demand for trucks, enabled by revised fuel economy regulations from the Obama era and cheap fuel and cheap money abound. It won’t last forever. And even so GM’s returns and stock price – hovering at its post-bankruptcy range of ~$35 – are weak.
GM Chairman and CEO Mary Barra on meetings with members of Congress from Ohio and Maryland:
“I had very constructive meetings with members of Congress from Ohio and Maryland. I share their concerns about the impact the actions we announced last week will have on our employees, their families and the communities. These were very difficult decisions — decisions I take very personally. I informed the members that many hourly employees at the impacted U.S. plants will have the opportunity to work at other U.S. GM plants and that we are committed to working with them to minimize the impact on the communities. I also informed them that all salaried GM workers impacted by these actions are being offered outplacement services to help them transition to new jobs.”
LMC analysis and impact on GM and the automotive sector: While the timing of the announcement surprised many, the plants impacted by the decision are logical selections, as all of these plants have been greatly underutilized. For 2018, capacity utilization was 40% at Hamtramck, 31% at Lordstown , 32% at Oshawa 1 and 71% at Oshawa 2. The plants were forced to run on one shift as a result of weakening demand for the models they produced, making them expensive operations that were unsustainable for GM. From 2020 to 2025, we expect that GM will lose anywhere from 90k to 120k units of production per year. The loss of the Chevrolet Cruze will have the greatest impact, as we had expected GM to make over 125k units per year of the Cruze at Lordstown through 2025.
LMC currently expect that Cruze production will also end at Ramos Arizpe in March 2019, but the possibility exists that it will remain for the Mexico and Canada markets, in which case Ramos Arizpe would retain 30k units annually of the Cruze . Some of this lost Cruze volume will be diverted to other vehicles within GM’s showroom, including the Chevrolet Trax and Chevrolet Equinox. Automakers like Honda, Nissan and Toyota are also expected to pick up some of this lost volume. In particular, models such as the Honda Civic and Toyota Corolla will experience volume benefits as a result of the loss of the Cruze as a major competitor.