GM faces fiscal, political minefields as it assesses plants

With too many factories making slow-selling cars, General Motors can’t afford to keep them all operating without making some tough decisions. But the political atmosphere might be limiting its options.

A possible scenario, analysts say, is to close its sprawling Lordstown plant in northeastern Ohio because the compact car it makes also is built in Mexico. The once-bustling factory already has lost two of its three shifts and 3,000 union jobs since the beginning of last year.

But moving that car, the Chevrolet Cruze, south of the border brings the risk of provoking a backlash and tweetstorm from President Donald Trump. And GM also isn’t sure whether he’ll make good on threats to impose 25 per cent tariffs on vehicles imported from Canada and Mexico.

Also at issue is that the Cruze plant just outside Youngtown is in a Democratic and labour stronghold, where Trump won over a surprising number of voters two years ago by reaching out to what he called America’s “forgotten men and women.”

At a rally near the plant last summer, Trump talked about passing by big factories whose jobs “have left Ohio,” then told people not to sell their homes because the jobs are “coming back. They’re all coming back.”

Altogether, GM has five car factories with plenty of unused capacity in Kansas City, Kansas; Lordstown; and Detroit-hamtramck, Lansing, and Orion Township, Michigan.

Three are running on one shift per day, which is inefficient and costs GM money. Automakers like to run plants on at least two daily shifts.

To deal with the overcapacity, GM will either have to eat the added costs, close one or more plants, or retool them to build trucks and SUVS that now are favoured by U.S. buyers.