Trump warns GM could lose subsidies over layoffs

28 November, 2018, 02:45 | Author: Kathy Ellis
  • The announcement is the biggest restructuring in North America for the US's largest automaker since its bankruptcy a decade ago

He said the first political rally he attended was the one previous year in Youngstown where Trump told voters not to sell their homes. "I said, 'You know, this country has done a lot for General Motors".

"We recognise the need to stay in front of changing market conditions and customer preferences to position our company for long-term success", Barra said. GM Chief Executive Officer Mary Barra is trying to make the company leaner as USA auto demand slides from a record in 2016 and sales in China - GM's other profit center - are also in a slump.

"We're taking these actions while the economy is strong", Barra told reporters in Detroit.

GM's shares in NY jumped as high as 7.8 per cent to US$38.75.

That said, GM still has skin in the game. "I am here to protect America's Workers!" he wrote.

Component sharing and expanded use of virtual tools will further reduce costs and lower development times respectively, with GM predicting that by the turn of the decade, 75 per cent of its global sales will derive from just five vehicle platforms. "It's a kick in the nuts". The Canadian plant appeared to be most in danger of closing.

Workers at the Ontario plant staged a wildcat strike on Monday to protest the closure.

Keeping open a plant slated for closure is not without precedent for GM.

The automaker did not say the plants would close, but used the term "unallocated", which means no future products would be allocated to these facilities next year. Five plants are also in jeopardy of closing. Another two will close outside North America. Last month, GM rival Ford Motor.

GM said it will take pre-tax charges of $3 billion to $3.8 billion to pay for the cutbacks, but expects the actions to improve annual free cash flow by $6 billion by the end of 2020.

The layoffs come amid the backdrop of a trade war between the U.S., China and Europe that likely will lead to higher prices for imported vehicles and those exported from the U.S. Barra said the company faces challenges from tariffs but she did not directly link the layoffs to them.

The General Motors assembly plant in Oshawa Ontario Canada
The General Motors assembly plant in Oshawa Ontario Canada

Tom Wolikow, a United Auto Workers activist who was among the earlier layoffs, says the timing of Monday's announcement was particularly brutal.

GM's Cruise LLC unit is developing the company's self-driving technology and plans to have a model ready to operate as a ride-hailing business starting late next year.

Mr. Kudlow said there is disappointment and "anger" at GM over its decision.

She said GM is still hiring people with expertise in software and electric and autonomous vehicles. "So I think you're going to see something else happen there, but I'm not happy about it", he said.

GM's stock price surged on the heels of the announcement, closing at 37.65, up almost 5 percent on the day. Six models produced at those plants will also bite the dust.

"Oshawa is building the previous generation trucks that are very helpful in the crossover period".

The timing of the decision was surprising, but not the decision itself, said Dennis DesRosiers, president of DesRosiers Automotive Consultants.

"They're all coming back", he said at a rally in the state.

The decision is "devastating" for workers at the plant and auto suppliers, but Oshawa has adapted over the years and will survive this as well, DesRosiers added.

Workers at the Ontario plant walked off the job Monday but were expected to return Tuesday.

In a statement, Governor John Kasich said the news was "frustrating" but said he would work with GM to try to preserve the plant. "They better put something else in".

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