Trump can’t bully GM to re­open plants, in­dus­try ex­perts say

Tweets about Lord­stown tar­get CEO and union

The Buffalo News - - BUSINESS NEWS - By Jamie L. Lareau

A week­end con­ver­sa­tion be­tween Pres­i­dent Trump and Gen­eral Mo­tors’ CEO Mary Barra re­mains a mys­tery, but one thing is clear: Ex­perts say GM can’t be strong-armed into re­open­ing its Lord­stown Assem­bly plant in Ohio – even by the pres­i­dent of the United States.

Trump let loose a bar­rage of tweets over the week­end tar­get­ing GM for its plans to idle five plants in North Amer­ica, in­clud­ing Lord­stown, by the end of this year or early next year as part of a com­pany re­struc­tur­ing plan to save $2.5 bil­lion this year.

He did not let up on Mon­day when he tweeted: “Gen­eral Mo­tors and the UAW are go­ing to start ‘talks’ in Septem­ber/Oc­to­ber. Why wait, start them now! I want jobs to stay in the U.S.A. and want Lord­stown (Ohio), in one of the best economies in our his­tory, opened or sold to a com­pany who will open it up fast! Car com­pa­nies ... .. ”

And a few min­utes later: “... . are all com­ing back to the U.S. So is ev­ery­one else. We now have the best Econ­omy in the World, the envy of all. Get that big, beau­ti­ful plant in Ohio open now. Close a plant in China or Mex­ico, where you in­vested so heav­ily preTrump, but not in the U.S.A. Bring jobs home!”

But for a U.S. pres­i­dent to pub­licly brow­beat a com­pany, urg­ing it and the UAW to start con­tract ne­go­ti­a­tions now rather than this fall, closer to when the con­tract ex­pires, is “a bit pe­cu­liar” and strictly po­lit­i­cal, said Jes­sica Cald­well, ex­ec­u­tive di­rec­tor of In­dus­try Anal­y­sis at Ed­munds.

“Ohio is a very im­por­tant place for Don­ald Trump, es­pe­cially as he looks at the 2020 elec­tion,” she said. “He ran on the idea that he’d bring jobs back in these piv­otal ar­eas. I don’t think there’s much to this other than some early 2020 cam­paign­ing.”

The tweets came just days be­fore Trump’s planned vis­its to Ohio.

The pres­i­dent is ex­pected to tour the Lima Army Tank Plant, about three hours’ drive from Lord­stown, early to­day and later has plans to at­tend a pri­vate fundraiser at Brook­side Coun­try Club in Jack­son Town­ship near Can­ton, about an hour’s drive from Lord­stown.

“This is an in­dus­try with very long plan­ning hori­zons at huge scales of in­vest­ment and pro­duc­tion,” said Kristin Dz­iczek, vice pres­i­dent of In­dus­try, La­bor & Eco­nomics at the Cen­ter for Au­to­mo­tive Re­search (CAR) in Ann Ar­bor, Mich. “It’s eco­nom­i­cally sig­nif­i­cant and im­por­tant to the coun­try. But GM can’t be bul­lied into mak­ing de­ci­sions that aren’t good busi­ness de­ci­sions.”

The fed­eral govern­ment has lit­tle power over cor­po­rate de­ci­sions, which are in­flu­enced by mar­ket con­di­tions, eco­nomics and a bind­ing con­tract with the UAW, an­a­lysts say.

GM is dis­con­tin­u­ing many of the prod­ucts built at those five plants, which are mostly sedans, say­ing U.S. con­sumers pre­fer SUVs and pick­ups. But GM has faced a back­lash for opt­ing to build other new prod­ucts, such as the Chevro­let Blazer SUV, in Mex­ico.

Over the week­end, Trump’s tweets tar­geted GM and a lo­cal UAW leader urg­ing GM to re­open the Lord­stown plant.

There’s just one prob­lem that auto in­dus­try ex­perts say Trump fails to rec­og­nize: Since 2010, when GM started build­ing the Cruze com­pact car at Lord­stown on three shifts, the ve­hi­cle profit mar­gins have been too thin to keep the plant op­er­at­ing in the black.

As sales of the car dipped, the plant dropped to two shifts on Jan. 19, 2017, then down to one shift on June 22, 2018, putting the plant fur­ther in the hole in terms of its prof­itabil­ity, said a GM source fa­mil­iar with the plant. Last year, Chevro­let sold 142,617 Cruze cars, down 22.8 per­cent from 2017.

“It’s dif­fi­cult to turn a profit for it at that plant,” said Dz­iczek. “There are two other assem­bly plants af­fected and two trans­mis­sion plants as part of this that are run­ning at un­der­uti­liza­tion too, so GM has a lot to con­sider.”

Two of those plants are in Michi­gan: Detroit-Ham­tramck, set to idle in Jan­uary 2020, and the War­ren Trans­mis­sion plant.

Trump started his tweet at­tacks Satur­day when he urged GM to re­open the Ohio plant, which just made its last Chevro­let Cruze ear­lier this month: “Be­cause the econ­omy is so good, Gen­eral Mo­tors must get their Lord­stown, Ohio, plant open, maybe in a dif­fer­ent form or with a new owner, FAST!”

Then, at 1:38 p.m. Sun­day, Trump tweeted: “Demo­crat UAW Lo­cal 1112 Pres­i­dent David Green ought to get his act to­gether and pro­duce. G.M. let our Coun­try down, but other much bet­ter car com­pa­nies are com­ing into the U.S. in droves. I want ac­tion on Lord­stown fast. Stop com­plain­ing and get the job done! 3.8 per­cent Un­em­ploy­ment!”

But Trump wasn’t done. At 6:27 Sun­day evening, he tweeted: “Just spoke to Mary Barra, CEO of Gen­eral Mo­tors about the Lord­stown Ohio plant. I am not happy that it is closed when ev­ery­thing else in our Coun­try is BOOM­ING. I asked her to sell it or do some­thing quickly. She blamed the UAW Union – I don’t care, I just want it open!”

GM said it was not “go­ing to pro­vide any specifics from a pri­vate con­ver­sa­tion” when asked whether Barra did in­deed “blame” the UAW.

Like­wise, on Mon­day, a spokesman for the UAW de­clined to spec­u­late on what Trump and Barra dis­cussed. But he said the UAW does not con­done the ver­bal at­tack on Green.

At 10 a.m. Mon­day, the UAW tweeted: “Cor­po­ra­tions close plants, work­ers don’t. Join us, @realDonaldTrump in leav­ing no stone un­turned against @GM. Don’t let GM off the hook.”

Barra and GM have pre­vi­ously de­scribed the de­ci­sion to idle the plants as busi­ness moves driven by con­sumer de­mand.

Trump’s mo­ti­va­tion to keep the plant run­ning is likely driven by pol­i­tics, ex­perts say.

“There’s al­ways been be­hind the scenes jaw-bon­ing and on oc­ca­sion pres­i­dents have gone af­ter par­tic­u­lar in­dus­tries to tell them about pric­ing and what they should be do­ing,” said Erik Gor­don, a pro­fes­sor at the Univer­sity of Michi­gan Ross School of Busi­ness. “What we seem to have in this po­lit­i­cal cy­cle is that in­dus­tries and par­tic­u­lar busi­nesses are be­ing used by politi­cians be­cause cer­tain busi­ness are a po­lit­i­cal de­ci­sion.”

Tri­bune News Ser­vice

Work­ers at GM’s Lord­stown, Ohio, plant held a rally there in early March. Pres­i­dent Trump com­plained on Twit­ter about GM’s plan to close the plant. He will be in Ohio to­day to at­tend a pri­vate fundraiser.

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