Published: Wed, November 28, 2018
Money | By Bruce West

USA may eliminate electric auto subsidies for GM

USA may eliminate electric auto subsidies for GM

I spoke with [Barra] when I heard they were closing, and I said, you know, this country's done a lot for General Motors.

Trump tweeted his warning Tuesday, a day after GM announced it would shutter five plants and slash 14,000 jobs in North America. In October, nearly 65 percent of new vehicles sold in the US were trucks or SUVs. It was about 50 percent cars just five years ago.

Five GM vehicle plants are operating at 37 percent capacity, according to the Center for Automotive Research.

Unlike its plants making passenger cars, many of GM's plants producing its higher-margin trucks and SUVs are running on three shifts, with some running six and sometimes seven days a week to keep up wih demand.

While GM, and other vehicle companies, have spoken out against rising production costs caused by the Trump administration's protectionist tariffs, a spokeswoman for the company told TheBlaze that the layoffs and plant closures "are being made as part of our ongoing transformation and are not related to recent trade or tariff decisions".

But isn't the economy on solid footing?

Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed US auto production.

The U.S. automobile manufacturer announced Monday it plans to cease work on the Chevrolet Cruze at a Lordstown, Ohio, plant and on three Chevy, Buick and Cadillac models at a Detroit-Hamtramck facility in MI.

Work on six-speed transmissions made at the Warren, Michigan, transmission plant would stop August 1, while the Baltimore transmission plant would stop production April 1, GM said.

The company also said it will stop operating two additional factories outside North America by the end of next year, in addition to a previously announced plant closure in Gunsan, South Korea.

GM will jettison the Buick LaCrosse, Chevrolet Impala and Cadillac CT6 sedans next year.

"Their (Chevy Cruze) is not selling well".

Trump frequently criticized the closure plans during the 2016 campaign, and promised to prevent similar occurrences in the future. In the meantime, external forces-particularly, China, GM's largest market-have dented GM's bottom line, wiping out much of the company's savings from the GOP tax reform. "Get a vehicle that is selling well and put it back in", Trump said. Ford has said it is restructuring and will lay off an unspecified number of white-collar workers. "We are now looking at cutting all @GM subsidies, including. for electric cars", Trump said on Twitter.

What will happen to the workers?

The plan to cut 15 percent of salaried workers follows a round of buyouts that GM offered to about a quarter of its longer-tenured workforce at the end of October.

"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".

The company has been hit hard by steel tariffs after President Trump vowed to take on China.

In a statement earlier this year to the Commerce Department, GM warned that President Donald Trump's import tariffs "could lead to a smaller GM, a reduced presence at home and overseas for this iconic American company, and risk fewer - not more - USA jobs".

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