The facts about China, GM and its four plants slated for closure
President Donald Trump met with with General Motors CEO Mary Barra at the White House Thursday. Her decision to shut four US plants has clearly made him unhappy.
Last week Trump unleashed his latest twitter attack on GM, incorrectly suggesting that it was the company’s plants in China that were responsible for the decision to shut down the four US plants.
“General Motors, which was once the Giant of Detroit, is now one of the smallest auto manufacturers there. They moved major plants to China, BEFORE I CAME INTO OFFICE. This was done despite the saving help given them by the USA. Now they should start moving back to America again?” he tweeted last Friday.
Once GM is done with this round of plant closings it will have 29 US plants, down from 33. There are 27 plants in China.
But those were built to serve the Chinese market, where GM now sells more cars than it does in the United States, allowing GM to become a larger and more profitable company. And because the Chinese market has produced $16 billion in profits for GM since 2010, money spent to build cars there comes from its own operations, not from US profits.
Also, GM did not “move” any plants to China. The company has never exported many cars from US plants to China. GM began selling a significant number of cars there only after building plants there early in this century.
Chinese plants do not ship many cars back to the United States, and do not have any impact on US factories. In 2018, 30,000 Buick Envisions built in GM’s Chinese plants were the only cars bought by US buyers — amounting to about 1% of GM’s overall US sales.
The company has about 58,000 employes in China, compared to 100,000 in the United States, although its US employment level is significantly lower than it once was.
Twenty years ago, North American employment at the company stood at 217,000, most of that in the United States despite plants in Mexico and Canada. Automation and lost US market share are responsible for most of that drop — not Chinese imports.
The four plants are shutting down primarily because American car buyers aren’t buying nearly as many traditional sedans as they once did. The Lordstown, Ohio, plant built the Chevrolet Cruze. The Warren, Michigan, plant built transmissions for sedans. The Detroit-Hamtramck plant, due to be closed next year, builds the Chevrolet Impala and the Cadillac CT6. It has about 800 employees, down from about 1,500 when the closing plans were announced in November. Only the Baltimore plant among the four US plants closing builds transmissions for trucks.
Many of the more than 3,000 hourly employees who worked at those plants in November have been offered jobs at other GM plants, and many have taken the offer to move. GM says it has created 2,200 hourly jobs in the US so far this year, many filled by those laid-off workers.
Whether those plants can be saved depends not on the talks between Barra and Trump, but rather the negotiations now underway between GM and the United Auto Workers union.
The union is seeking a new contract to replace the one that expires at 12:01 a.m. on Sept. 15, and it has made clear that finding new work for those four plants is a top priority. Getting GM to agree to invest money and allocate vehicles to plants is how the union wins job guarantees for members in contract negotiations. And GM acknowledges that there is a chance the plants could get new life in the current contract.
“To be clear…the ultimate future of the unallocated plants will be resolved between GM and the UAW,” said a statement from GM in March in response to an earlier Twitter attack by Trump.