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article imageGM closures — Blame continued decline in U.S. car sales, tariffs

By Karen Graham     Nov 28, 2018 in Business
General Motors' stunning announcement on Monday that it plans to close up to five assembly plants in North America and slash its workforce angered President Trump, who views the U.S. economy as a reflection of his presidency.
Trump, on Wednesday, threatened to impose new tariffs on auto imports as his latest response to General Motors' decision to shutter U.S. factories and lay off workers, according to The Hill.
Using his Twitter account, the president argued that a "long-standing 25 percent tariff on light trucks" had boosted U.S. automakers and an additional 25 percent tariff on imported cars will do the same.
”If we did that with cars coming in, many more cars would be built here and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress,” Trump wrote.
The president said major auto exporting countries “have taken advantage of the U.S. for decades and warned, “that the president has great power on this issue.”
”Because of the G.M. event, it is being studied now!” he wrote.
An auto union member in Oshawa  Ontario -- where General Motors has announced plans to shutter its p...
An auto union member in Oshawa, Ontario -- where General Motors has announced plans to shutter its plant next year
Lars Hagberg, AFP
On Tuesday, Trump threatened to block payment of government electric vehicle subsidies to GM, something the president may not have the power to do, but he certainly made it clear he was going to try. Trump is pressuring GM to keep its small car plant in Ohio open, according to Reuters.
GM spokeswoman Kimberly Carpenter said on Tuesday: “We continuously look at our operations for opportunities to improve our efficiency and capacity utilization. We believe the actions announced yesterday move us in the right direction and we will continue to monitor the market and consumer trends and adjust accordingly.”
US President Donald Trump (R) and European Commission head Jean-Claude Juncker met in July 2018 and ...
US President Donald Trump (R) and European Commission head Jean-Claude Juncker met in July 2018 and pledged to hold off from further tit-for-tat tariffs and to work twoards scrapping customs duties on all goods
What about that 25 percent tariff?
Trump told a little lie today when he threatened to impose a 25 percent tariff on imported cars in response to GM's move on Monday to shutter the five plants.
Some months ago, the U.S. Department of Commerce was ordered to turn in an investigation report on the need to impose additional tariffs on European and Asian cars. That report is now on Trump's desk. The report recommends a 25 percent customs duty on car imports from all countries except Canada and Mexico.
Trump previously had decided to put off auto tariffs on Europe in exchange for the European Union agreeing to purchase more American soybeans. And as The Hill reports, the plant closures, along with a wobbly stock market and rising interests rates, appear to have sparked fears of an economic downturn - angering Trump, who views our economy as a reflection of his presidency.
Ford F-150 pickup truck
Ford F-150 pickup truck
Ford Motor Company
Declining American interest in sedans
The sale of traditional cars in North America has been declining for the past six years and continue to decline. After GM closes its five plants in the U.S. and Canada, it will still have four plants open that include the plant in Fairfax, Kansas, which builds the Chevrolet Malibu and Cadillac XT4 compact SUV. This plant is running at 48 percent capacity.
GM's plant in Lansing, Michigan, that builds the Cadillac ATS and CTS and Chevrolet Camaro is running at just 33 percent capacity, while the GM Orion Township, Michigan, facility that builds the Chevrolet Bolt electric car and the Chevrolet Sonic subcompact runs at 34 percent capacity. A Bowling Green, Kentucky, plant that builds the Chevrolet Corvette sports car works at just 27 percent of its potential output, according to LMC data.
“Until GM gets more flexibility in its platforms, it will continue to have to play whack-a-mole with its plants as the market transitions – and it will happen again,” said LMC analyst Bill Rinna. To look at the facts another way - The four GM car plants remaining open have a capacity to build 800,000 cars a year. But will only produce 360,000 cars this year, according to LMC.
In comparison, Detroit-based rivals Ford Motor Co. and Fiat Chrysler Automobiles will have one car plant each in North America after 2019. The Big Three automotive companies have seen the demand for traditional cars decline from 2014, when 48 percent of vehicles sold in the U.S. were cars, according to market researchers at J.D. Power and Associates. This year, sedans will account for less than a third of light-vehicle sales.
More about General motors, Tariffs, US car sales, new tariffs, Economy
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