Trump to Cut Subsidies to GM After Company Closes Plants

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President Trump just fired the first shot in his latest Twitter war.

Tweeting that he was “very disappointed” after General Motors had announced factory closures in Ohio’s Lordstown, Michigan’s Hamtramck and Warren, and Maryland’s White Marsh, Trump called out CEO Mary Barra for ingratitude towards taxpayers after a controversial 2008 bailout that saw the US Treasury Department dump $51 billon in loans and share purchases into the too-big-to-fail Detroit behemoth—only to come out $11.3 billion in the red.

If we’re counting, that’s more than enough to pay for two border walls.

With as many as 18,000 pending North American job losses—including 2500 at the 111 year-old Oshawa, Ontario plant—Trump has threatened to pull the plug on federal subsidies to the company many have scornfully referred to as “Government Motors.”

These production cuts—really a product line restructuring that will see GM follow Ford in killing all its sedans in favor of higher-margin SUVs and crossovers—are slated to save the company $4.5 billion but nonetheless perplex some analysts such as Mary Lovely, a senior fellow at the Peterson Institute for International Economics, who points to the 2015 $10 billion share buyback whose purpose was unclear, except to bolster stock prices to the benefit of employees compensated in company shares.

According to the General, the company’s forward path is to “prioritize future vehicle investments in its next-generation battery-electric architectures,” doubling investments in electric and self-driving cars (the latter also known as autonomous vehicles) over the next two years.




Never mind that EVs currently comprise fewer than 2% of cars currently sold in the US, and that includes plug-in hybrids that still have an internal-combustion engine, or that these models are subsidized by an Obama-era $7500 federal tax credit, or that no one knows for certain when (or even if) Level 5 fully autonomous vehicles will ever hit the market—or if Americans will buy a car with no steering wheel and no accelerator pedal. GM is betting on near-future demand for these emerging technologies meanwhile abandoning fuel-efficient small passenger cars, such as the Chevrolet Cruze (EPA-rated at 47mpg highway) for fuel-thirsty trucks such as the GMC Yukon (23mpg highway).

Big Labor, at least, seemingly agrees with Trump that this is all a ruse to move production out of the US and into markets such as China and Mexico, where the forthcoming 2019 Chevrolet Blazer SUV will come out of the Ramos Arizpe Assembly in Coahuila. AFL-CIO Policy Director Damon Silvers points out that when it comes to outsourcing production GM are “bottom feeders,” paying as little as $2 an hour.

Adding insult to injury, GM’s retreat from its Detroit-Hamtramck facility comes after the company teamed up with local authorities in the early 1980s to use eminent domain to seize 465 acres of private urban land, displacing 4200 residents while demolishing 1400 historic homes and 140 businesses to build the facility.


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