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General Motors will close production of its first of five North American plants it plans to close early next year as part of a corporate restructuring. Production at the plant in Lordstown, Ohio, ends Wednesday. (March 5)
AP
The conversation between President Donald Trump and General Motors President and CEO Mary Barra remains a mystery, but one thing is clear: Experts say GM can not be armed to reopen its Lordstown Assembly plant in the US. Ohio, even by the President of the United States. States.
Over the weekend, Trump launched a series of tweets for GM, which plans to decommission five plants in North America, including Lordstown, by the end of the year. year or early next year as part of a restructuring plan to save $ 2.5 billion this year.
He did not give up Monday when he tweeted: "General Motors and UAW are going to start" talks "in September / October Why wait, run them now! I want jobs to stay in the US and I want Lordstown (Ohio) one of the best economies in our history, open or sold to a company that will open it quickly!
And a few minutes later: "…. all come back to the US Everyone else is too.We now have the best economy in the world, which is the envy of all.Open this great and beautiful factory of Ohio now Close a factory in China or Mexico, where you have invested a lot before Trump, but not in the US Bring home jobs! "
But for an American president to publicly intimidate a company, urging him as well as the UAW to begin contractual negotiations now rather than this fall, getting close to the expiry of the contract, is " a bit strange "and strictly political, Jessica Caldwell, executive director of the Analysis Industry in Edmunds, said Monday.
The assembly plant of General Motors in Lordstown. (Photo: General Motors)
"Ohio is a very important place for Donald Trump, especially with regard to the 2020 elections," she said. "He had the idea of bringing back jobs in these crucial areas. I do not think there is much to it, other than a campaign from the beginning of 2020. "
The tweets arrived a few days before Trump's scheduled visits to Ohio.
"It's an industry with very long planning horizons and huge investments and production," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research (CAR) in Ann Arbor. "It's economically significant and important for the country, but GM can not be intimidated into making decisions that are not good business decisions."
The federal government has little power over business decisions, which are influenced by market conditions, economic factors and a binding contract with the UAW, according to analysts.
Sedans a bleeding cash
GM is shutting down most of the products manufactured in these five factories, mostly sedans, claiming that US consumers prefer SUVs and vans. However, GM faced a backlash for building new products, such as the Chevrolet Blazer SUV in Mexico.
Over the weekend, Trump's tweets targeted GM and a local leader of the UAW, urging GM to reopen the Lordstown plant.
More: Donald Trump attacks GM and the UAW about the Lordstown plant closure project
More: President Donald Trump at GM, UAW: Discussions on the Lordstown Plant Start Now
Automotive experts say Trump has not recognized the problem: since 2010, when GM began building the compact Cruze in Lordstown on three shifts, vehicle profit margins were too thin for factory can continue to operate in black.
As car sales declined, the plant fell to two teams on January 19, 2017, then to a position on June 22, 2018, placing the plant further into the chasm in terms of profitability, a said a GM source familiar with the plant. Last year, Chevrolet sold 142,617 Cruze cars, down 22.8% from 2017.
"It's hard to make a profit for this factory," said Dziczek. "Two other assembly plants and two transportation plants are also underutilized, so GM has a lot to take into account."
Two of these plants are located in Michigan: Detroit-Hamtramck, which is expected to idle in January 2020, and the Warren Transmission plant.
Trump's attacks on social networks
Trump began his tweet attacks on Saturday when he urged GM to reopen the Ohio factory, who just made his latest Chevrolet Cruze earlier this month: "Because the economy is so good, General Motors has to open its plant in Lordstown, Ohio, perhaps in a different form or with a new owner, FAST! "
Then at 13:38 on Sunday, Trump tweeted: "The UAW 1112 Democrat President, David Green, should act and produce." GM has dropped our country, but other far better auto companies are coming to the United States en masse. want Lordstown to act quickly, stop complaining and get the job done – 3.8% unemployment! "
But Trump was not finished. Sunday night at 6:27, he tweeted: "Just talk to Mary Barra, CEO of General Motors about the plant in Lordstown, Ohio. I am not happy that it is closed when all the rest of our country is in full swing. I asked him to sell it or do something quickly. She blamed Union UAW. I do not care about that, I just want it to be open! "
GM said he would "give no details in a private conversation" when asked if Barra had actually "blamed" the UAW.
Similarly, on Monday, a spokesman for the UAW refused to speculate on the talks between Trump and Barra. But he said that the UAW did not tolerate the verbal attack on Green.
On Monday, at 10 am, the UAW tweeted: "Companies are shutting down factories, not workers." Join us, @realDonaldTrump by not leaving any stone unturned against @GM. Do not let GM off the hook. "
Policy on automobile production
Barra and GM have previously described the decision to leave factories inactive as business evolves according to consumer demand.
More: GM confirms removal of white-collar jobs over the next two weeks
Trump's motivation to run the plant is probably motivated by politics, experts say.
"There have always been backstage scenes and, on occasion, the presidents have turned to certain industries to explain the prices and what they should do," said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. "What we seem to have in this policy cycle is that men and women use industries and some companies because some companies are a political decision."
For example, he said Senator Elizabeth Warren, a Democrat, rigorously accused the US drug industry of calling on the government to make generic drugs. In addition, in the early 1900s, President Teddy Roosevelt was touted as a "breaker of trust."
"Thus, the oil trust, the rail trust and the utility trust were part of the presidential campaigns," said Gordon. "It's less the case in the last 50 years. Everyone, whether the president or the future president, like Senator Warren, uses companies as the centerpiece of his political campaign. "
Contractual restrictions
But politicians can not get the reopening of Lordstown simply by "shocking," Gordon said, although the US government had helped GM go bankrupt in 2009 with a taxpayer-funded bailout.
"The government does not have enough levers to do it in the auto industry," Gordon said.
But this can influence the movements of the company. In March 2009, the government pressured GM CEO Rick Wagoner to resign, for example, said Dziczek of the CAR. Do not look for Trump's tweets to finally influence GM and UAW, she said.
"Neither party negotiates in public or in the press. This is a two-way negotiation and even investments, which involve state and local incentives, are not at the negotiating table, "said Dziczek. That's all the union and GM have agreed on. "
Until then, the existing contract between GM and the UAW prohibits GM from selling, splitting or disposing of any plant until a new agreement is ratified.
"So we all have to wait to see what they will do," Dziczek said.
Contact Jamie L. LaReau at 313-222-2149 or [email protected]. Follow her on Twitter @Jlareauan. Learn more about General Motors and sign up for our Car Newsletter.
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