GM plans to cut about 14,000 jobs and shut down several factories in a move to restructure.
The news is disappointing, but the logic is sound. GM needs to invest in its future, and that means focusing on electric and self-driving vehicles. Both are coming to a driveway near you quicker than you think. What isnt selling? Old-fashioned sedans. Well, that isnt entirely true. Japanese automakers still sell lots of Camrys, Civics and the like, but GM and Ford make their money on pickup trucks, SUVs and crossovers.
Its amazing how fast consumer preferences shift. Five years ago, passenger cars represented about half the U.S. market. Today its around 30 percent. Ford plans to stop selling most cars in North America in the next few years. Fiat Chrysler made a similar decision two years ago. As for GM, it will end production of the Chevrolet Cruze, Volt and Impala, along with several other passenger vehicles. Lordstown makes the Cruze, which makes the Lordstown plant dispensable.
Ideally, every American manufacturer is a powerhouse, but GM lost that status decades ago. The company was in danger of collapse during the Great Recession, accepted a government bailout and then retooled as a profit-focused entity rather than one obsesssed with market share. Staying big for prides sake is a losers game. Look at Sears, which failed to reinvent itself and now sits in bankruptcy court. GM CEO Mary Barra said she made the decision to revamp even though the company is profitable because waiting around to respond to a crisis means waiting too long. The industry is changing very rapidly, Barra said. We think its appropriate to get in front of it while the business and the economy are strong.
The person who doesnt understand Barras thinking is President Donald Trump. Hes made a lot of promises about protecting and creating factory jobs in the U.S., and tossed in some threats as well. After pressing Barra to reconsider plant closings, he tweeted Tuesday that hed consider cutting subsidies to GM for electric vehicles. I am here to protect Americas Workers! he wrote. Trump obviously has Ohio voters on his mind, not free-market principles.
In a Wall Street Journal interview Monday, Trump said GM should stop making vehicles in China. I think they forgot where they came from. Not true. What GM and every competitive American company does is follow the customers. Believe it or not, last quarter General Motors sold more vehicles in China than in the United States. Making cars in America for export to China would render them structurally unprofitable, an industry analyst told the Journal.
It would be helpful if Trump recognized that being president doesnt make him economy czar. He can levy tariffs or otherwise badger CEOs, but he cant force companies to continue to operate factories that arent profitable. Employers will do whats best for their interests, because thats how they stay in business and, not incidentally, how they pay competitive salaries to their workers.
The old business adage is true: Whats good for General Motors is good for the country.
The Chicago Tribune
