General Motors Shuts Five Plant in U.S. and Canada, Causing Economic Worry
The American car manufacturer General Motors (GM) made a stunning announcement on Monday that it will be closing five plants in both the United States and Canada, costing thousands of jobs. The decision comes as a bid to buoy slowing sales and invest in producing the types of vehicles currently demanded by consumers across the world. For President Trump, the move by General Motors came as unwelcome news and caused doubt at the effectiveness of his aggressive stance on global trade.
The manufacturing facilities being shuttered for General Motors “transformation” are located in Detroit, Illinois; Warren, Ohio; Oshawa, Ontario; White Marsh, Maryland; and Warren, Michigan. Most of these plants are used to produce small and mid-size vehicles, which have seen declining sales as consumers opt to buy SUVs and trucks. Between all five of these locations, the closing is likely to directly affect the jobs of over 18,000 workers, reducing the number of GM employees by 15%.
The President of General Motors, Mary Barra, argued that the harsh cuts were a necessity for her company. She declared that the decision to close the five plants was to, “keep ahead of changing market conditions.” This explanation was not just unsatisfactory for lawmakers in both Canada and America, but for the thousands of workers who are set to be laid off in the next six months.
United States President Donald Trump tweeted on Tuesday that he was, “very disappointed with General Motors” and that his administration is, “looking at cutting all GM subsidies, including electric cars.” His anger with General Motors comes as no surprise because preventing the closing of domestic manufacturing plants has long been a mainstay of the Trump campaign. However, many believe that the closings by GM have been directly caused by President Trump’s protectionist tariffs.
Though Republican-led tax cuts helped this year have helped to save General Motors over 150 million dollars this fiscal year, the costs of tariffs, especially on steel, have been steep. It is estimated that steel tariffs enacted by the Trump Administration have cost GM between 700 million and 1 billion dollars in expenses. It is highly likely that these rising costs have played a significant role in motivating the plant closures by General Motors.
On the other side of the border, Canadian President Justin Trudeau and Premier Doug Ford also expressed their displeasure with General Motors. Mr. Ford called the plant closures “absolutely devastating” and the President expressed his “deep disappointment” with Ms. Barra’s decision to cease operations at the manufacturing plant in Ottawa. Both lawmakers vowed to do everything they could to mitigate the damage for workers and their families, however, it appeared on Tuesday that they had no success in negotiating with General Motors to keep the plants open.
Despite the pain that will be caused in the cities and towns that are losing their manufacturing plants, investors across the globe lauded the decision of General Motors. GM’s stock shot up 5 percent after their announcement and has continued its climb into Tuesday and Wednesday. Analysts, like Michelle Krebs from Autotrader, supported the closures because General Motors, “is trying to get ahead of a potential crisis by making cuts now.” For many, the priority is avoiding a repeat of the 2008 financial crash, where General Motors and many other automotive companies went bankrupt and needed huge bailouts.