On Monday, General Motors announced plans to cut 14,800 jobs in Canada and the U.S. and cease production at four plants in Maryland, Michigan, and Ohio, including one in Lordstown, Ohio, that employs 1,600 people in a town of just 3,300.
The reaction from President Donald Trump was predictable. He has routinely billed himself to Rust Belt workers as a savvy businessman who can make deals and restructure the economy to benefit them. At a July 2017 rally in Youngstown, only 17 miles from Lordstown, he told his supporters, “Don’t sell your house.” The jobs, he insisted, are “all coming back.’’ After GM’s announcement, Trump told the Wall Street Journal that the company “better damn well open a new plant there very quickly.”
This was the kind of rhetoric that helped Trump make substantial gains in places like Mahoning County, which includes Youngstown and Lordstown, that were traditionally Democratic strongholds. He virtually tied Hillary Clinton in 2016, whereas Barack Obama won 63 percent of the vote there in 2012. Some of the region’s labor leaders told Bloomberg News that as much as 40 percent of UAW members voted Trump.
Just three weeks ago, 60 percent of Mahoning County backed Democratic Sen. Sherrod Brown in his reelection bid. Brown shares Trump’s skepticism of free trade agreements–he voted against NAFTA in 1993 when he was in the House–and believes Trump’s steel tariffs are “long overdue actions,” as are the tariffs on Chinese imports.
On Thursday, Sen. Brown and President Trump spoke on the phone about how to stop GM’s plans. Brown told news outlets that he sent Trump a copy of his American Cars, American Jobs Act, which he introduced to the Senate this past summer. The bill would give buyers a $3,500 discount for purchasing an American-made car and rescind a part of the 2017 Tax Cuts and Jobs Act that “allows some overseas profits to be taxed at a lower 10.5 percent rate, instead of the full 21 percent corporate rate.” Brown told reporters that Trump “liked the bill.”
What’s unclear is whether Brown’s legislation would have stopped or prevented GM’s decision. It’s also worth keeping in mind that GM isn’t closing the plants; it’s just ceasing production at them. There’s a chance that GM will reopen the plants to produce different cars. Over the next few months, GM could very come back to policymakers with proposals to keep some or all the jobs in Ohio in exchange for benefits of some kind.
The company is targeting plants that make sedans, which aren’t selling well compared to Asian sedans and American trucks and SUVs. Per the Wall Street Journal:
“Americans are buying more trucks and SUVs amid lower gas prices and better fuel efficiency. Small cars make up a third of U.S. vehicle sales compared to half in 2012. About 75% of GM sales last year were trucks and crossovers, up from 60% in 2012. Its share of the small-car market has also fallen by a third in a decade amid Japanese and Korean competition.”
(A question Trump, Brown, or any other politician interested in keeping Lordstown’s lights on are not asking is: why isn’t GM producing as good of sedans as Toyota?)
Additionally, Trump and Brown are, in a way, pitting themselves against two insurmountable forces: Chinese consumers and Trump’s stupidity.
“China is GM’s largest market, and it sold a third more cars there than in the U.S. last year. Beijing has set electric-car quotas, and to be competitive GM has little choice but to make cars in China. All the more so after Beijing raised tariffs on U.S.-made cars to 40% from 15% in retaliation for Mr. Trump’s tariffs.”
GM says they plan to use the money that is currently going toward manufacturing unattractive sedans for developing fully electric cars and self-driving technology, both things that should be cheered by anyone interested in green energy and better transportation.
If Brown and Trump are serious about helping GM stay competitive and in the United States, they might start by pulling back on tariffs, which have raised GM’s manufacturing costs by $700 million; that could pay for 9,400 employees.
On a political level, Trump has shown a path that Democrats should not follow: make completely unrealistic promises about being able to turn back the economic clock (“the jobs are coming back!”) and then bray like a thrashed mule when huge economic forces don’t heed your campaign rhetoric. Brown, who is considering a 2020 presidential run, already has his first attack ad made for him. He shouldn’t give Trump one in return.