The stock market didn’t like the sound of President Trump’s latest comments about General Motors’ plan to shutter five U.S. plants and fire over 14,000 U.S. and Canada-based employees. After Trump threatened to end “all GM subsidies” Tuesday, shares for the company fell precipitously.
“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland,” Trump tweeted Tuesday. “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!”
Wall Street was clearly tuned in to Trump’s response. “The automaker’s shares fell following the tweets and were down more than 3 percent on Tuesday afternoon, on track for their worst day in a month,” CNBC reports.
Trump’s ominous posts followed comments he made to reporters Monday in which he said he had a conversation with GM CEO Mary Barra with whom he was “very tough” about the company’s plans. GM’s 15% downsizing of its workforce will impact some 14,800 jobs in the U.S. and Canada and shut down five U.S.-based plants in Detroit and Warren, Michigan, Warren, Ohio, and White Marsh, Maryland.
“Well, we don’t like it,” Trump told reporters Monday (video below). “I believe they will be opening up something else. I was very tough. I spoke with [Barra] when I heard they were closing, and I said, you know, this country’s done a lot for General Motors. You better get back in there soon — that’s Ohio, and you’d better get back in there soon. So we have a lot of pressure on them. You have senators, you have a lot of other people, a lot of pressure. They say the Chevy Cruze is not selling well. I say, well then get a car that is selling well and put it back in. So I think that you’re going to see something else happen there. But I’m not happy about it. Their car is not selling well, so they’ll put something else. I have no doubt that in a not-too-distant future they’ll put something else — they better put something else in.”
In a statement Monday, Barra said the massive restructuring is intended to “continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future.” The plan is being rolled out now while the economy’s strong, she said, instead of downsizing amid a recession in the future. The company expects to save about $6 billion by 2020 as a result of the moves.
“The transition will come at the expense of about 8,000 salaried workers, and 6,000 hourly workers will either lose their jobs or be reassigned to other plants,” CNN Business reports. “The company last month offered voluntary buyouts for 18,000 salaried workers.”
The new plan is accompanied by a new motto: “Zero Crashes, Zero Emissions, Zero Congestion,” suggesting that the company is going to focus more on producing self-driving, electric vehicles in the future, though in the short-term it is devoting more resources to its most lucrative vehicles: SUVs and hatchbacks.
The heavily government-subsidized Chevy Volt, which the Obama administration promoted as the future of GM, is being discontinued, along with several other sedans, including the Cruze, the Impala, the Buick LaCrosse and the Cadillac CT6 and XTS.
General Motors filed for bankruptcy in 2009 but managed to turn itself around, though not without the help of the much-scrutinized federal bailout by the Obama administration. CNBC notes that it’s “unclear exactly how much GM benefits from federal government subsidies.”