President Trump Really Doesn't Seem to Understand How Business Works
Donald Trump always seems a bit out of his depth when discussing economic and trade issues and his reaction to the news of GM's plant closings was typical. GM is laying off 14,300 employees and closing five factories in the U.S. and Canada including an assembly plant in Lordstown, Ohio. That's a bit embarrassing for a President who promised to bring back jobs to America's manufacturing heartland.
Political Wire: “I said, those jobs have left Ohio. They’re all coming back. They’re all coming back. Don’t move, don’t sell your house. We’re going to fill up those factories or rip them down and build new ones.”— President Trump, quoted by the Columbus Dispatch in July 2017."
His reaction to GM's announcement was vintage Trump; he threatened them as if they had set out to sabotage his "America First" program.
CNBC: "They better damn well open a new plant there very quickly," Trump told the [Wall Street] Journal. "I love Ohio," Trump said. "I told them, 'you're playing around with the wrong person,'" he added, according to the newspaper."
"Trump continued: "I said, 'I heard you're closing your plant,'" he recalled from his conversation with [GM chief executive, Mary] Barra. "'It's not going to be closed for long, I hope, Mary, because if it is you have a problem.'"
GM's board will largely ignore the President's threats because they are focused on the bottom line. Trump's trade war and steel tariffs are costing the automobile industry billions and they have structural problems which need to be addressed.
CNBC: "The auto industry also fears that new tariffs, on top of those already enacted on Chinese-made vehicles and imported aluminum and steel, could have a major negative impact on the American new car market. Consumers could be hit with higher prices that would put the brakes on already declining car sales, hammering industry profits."
New York Times: "But demand for small and midsize cars has plunged. Two-thirds of all new vehicles sold last year were trucks and S.U.V.s. That shift has hit G.M.’s Lordstown plant hard. Just a few years ago, the factory employed three shifts of workers to churn out Chevy Cruzes. Now it is down to one. In 2017 the plant made about 180,000 cars, down from 248,000 in 2013."
And while the President seems focused on bringing back 20th Century industries like coal and the family car, GM is planning for the future with electric cars and autonomous driving systems.
Digital Trends: "General Motors is undertaking a massive cost-cutting plan aimed at freeing up cash to fund the development of technologies like electric powertrains and autonomous driving systems. But in the short term, GM appears set to purge many of the cars from its lineup as it closes factories that build them, while keeping more profitable trucks and SUVs in production."
By in large, American business doesn't care about our President's "America First" campaign bluster and all those empty promises he made to voters in the heartland. Corporations make decisions based on what's best for their stockholders. That's how business works.
Photo Credit: GM