Tariff like it's 1897


#401

Part of my brain died because this is going to be an actual thing said by people.


#402

Obviously the $1.5B tax cut they got wasn’t enough.


#403

Many people on Fox News will be saying it, many people. The King Emperor of Finland told me that he’s sad for me because GM has done this, because of the Democrats. Every time I meet with foreign leaders, they tell me, they say, they say that no one has done more for America.


#404

I mentioned this plant closing story to my dad, and he said “That came out of the blue! I thought the economy was doing well!” Which is probably the reaction of a large portion of America, since unless you pay attention to business news shows that actually look beyond the headlines a bit, you’d probably think all is well. (Aside from the stock market woes of the last few weeks, but of course everyone says not to pay too much attention to that anyhow.) But if you listen to Marketplace or similar real business journalism, you know we’re well overdue for some economic slowdown. The tax cuts may have delayed it a bit, but that was only temporary and besides the tariffs are counteracting whatever juice from that is left.


#405

#406

The overall economy is indeed softening but this is more than that; US manufacturing, as a sector, is actually doing great, with record high real output this year. But industrial employment took a massive hit during the Great Recession. Most of those jobs haven’t come back - and indeed more are going to go away due to automation, no matter what Trump says and no matter what the rest of the economy does.

Get used to these sorts of announcements, you’re going to see a lot more of them in the future as automation continues.


#407

Except GM said in June this would happen because of tariffs.


#408

#409

The tariffs were a factor according to CEO Mary Barra. But if you want to single out one person, I’d blame Elon Musk.

Elon proved that electric cars don’t have to be dull unexciting, only embraced by tree-huggers, and 2-3 car families who could live with one car hobble to be only used for city driving. If it wasn’t for him GM would still be making modestly improved Volts and autonomous cars would still be science project at Alphabet, and features like parallel parking assist would be limited to Mercedes and Lexus and other luxury cars.

I’ve been very impressed by Mary leadership at GM, she may be one of the best CEO the company has had.
She is going to get a lot of heat for announcing big layoff while the company was still profitable, although it lost money last year. The layoffs needed to be made, people are buying SUVs and pickup trucks, not sedans.
But it is also a helluva a lot better for the employees to get your notice that you job is disappearing when unemployment is at a record low, rather than getting led off at the bottom of recession when everybody is looking for job instead of today when employers are desperate to find workers.


#410

I disagree. If you want to blame one single person, it should (still) be Mary Barra. Elon, nor even Trump, are responsible for tuning the direction of a company over time. It’s the CEO and execs. The buck stops there. In effect, they are changing the course. They could have ditched older models sooner, or closed plants sooner, or done better market research or any number of things. I’m not trying to deflect blame at Trump or Elon for affecting the market, rather, that either is to blame, directly, for GM’s woes.


#411

You could also think of it this way…this is basically what would have happened back in 2008-9 if the bailouts hadn’t happened. Had GM declared bankruptcy back then, they’d have laid off thousands of workers, closed a bunch of plants, eliminated products…the same stuff, but with less planning and (presumably) not as much research into exactly which cuts were the right ones to make.

Obviously there’s a lot less collateral damage this way. A failure back during the financial crisis days would have meant less opportunity for those laid-off workers to get new jobs, more downstream impact on suppliers, heavier impact on the communities around the closing plants, etc. The bailouts bought us a significantly easier path to the eventual GM shrinkage.


#412

My understanding at the time was that there was no money to finance a restructuring during bankruptcy, indeed no money to continue regular operations. Also no entity (other than the government) interested in stepping in and providing that money. I’m not sure what exactly would happen in that situation, but I remember people talking about it basically being liquidation. Sell off the plant and equipment into a market where no one is confident that they can part with any money they have.


#413

I was actually going to post the same thing, and then stopped myself.

It is true that she does helm the ship, but she became ceo in 2014, which isn’t a lot of time to make the systemic change to electric vehicles, as GM’s issues are from decades of poor decision-making.

You could even read this as the pivot towards electric vehicles. Too late I suppose, but in the long-run could make a better GM.

I think if I were to blame any 1 person for this, I would blame the person that created the tariffs this thread is based on.


#414

I think the tariffs affected them, but also the entire US auto industry. But sourcing is just one thing, and typically items as big as those on the tariff list are sourced under multi-year contracts.

Market shifts and product direction is quite another thing entirely. We saw Ford essentially do model shakeup this year that GM is now jumping with as well. Personally, I think they should trim their brand line as well, but if just model trimming does the job … so be it.

The plant closings or idling will also allow them to gain a hand in union negotiations, as the UAW will want to keep as much as possible with the trimmings left and will scramble to do so.

All of these things are cyclical. I know that sounds insane, but they are. I’m in the heavy equipment manufacturing sector. It’s the same. Yes, the tariffs are affecting us. No, they will not be the reason we trim our lines or close our plants or (god forbid) if we have a RIF.

In short, Tesla laid off 9% of it’s workforce in June. Was that tariff related? No. It was a correction by the company to become profitable. And that’s the -same- thing going on here. It’s a course correction. Not a knee-jerk to tariffs.


#415

Aren’t sedans just a dying breed of car? The employees being effected made a car designed to compete with the imports which have pretty much owned that market. Electric or not, SUV’s (large and small) are where it is at now.


#416

Which is why I buy Japanese.


#417

My blaming Elon was mostly tongue-in-check. Honestly, I don’t think anyone person is too blame, and I argue the Mary is far more likely to part of the solution rather than the problem. GM culture is certainly biggest part of the problem, and the tariffs are of course a colossally stupid idea, which is going to hurt lots of companies.

I think companies have a DNA/culture and changing is really hard, and most companies fail after a few years, it is rare company that can survive its founder leaving, and ones that have last 100 years like GM or Ford, have are really rare. At one point there were nearly 100 cars companies in the US alone
It is sort of like blaming dinosaurs for not evolving quickly.

It is one of many many things that Trump doesn’t get and frankly neither do many Democratic politicians. But it is particularly stunning that as so called businessman Trump doesn’t understand this.

Creative destruction is a feature not a bug of capitalism. Cars last longer, robots can replace assembly line workers, services like Uber reduce the need for buying cars. Hence, there is less demand for cars and much less demand for ICE cars, and car workers. Since cars have big environmental impact, this something to be celebrated not met with Presidential rants.

This is intelligent downsizing on the part of Mary Barra is about as humane a way of laying off people as can be reasonable expected.


#418

Within all but one major sales segment: fleet vehicles.

And since there is a lower margin on fleet sales, you can see why the US manufacturers are ditching them. That being said, that leaves things open for Japanese or South Korean car brands to pull in shoppers within the lower priced sedan market.


#419

Yes, there’s always a market segment looking for low cost. Detroit is foolish if they abandon that market.


#420

This is your answer. They make more per unit profit selling tricks and SUVs so want to try and force as many of those into the market as possible.

However they are far more likely to take a hit in a recession than economy cars. So it is a foolish strategy to abandon well selling and profitable units like the Fusion.

It’s like ‘we sell millions of these and make money, but would make even more if we forced everyone who bought one to buy an Explorer instead’. Forgetting that the response of many, like myself, would be to say ‘fuck you Ford’ and never buy one of their cars again.

My wife, and both her sisters, as well as her sisters husband, all drive fusions. Ford is dead to me.