Trump threatens to cut GM subsidies amid layoffs, possible plant closures

U.S. President Trump participates in a campaign rally for Republican U.S. Senator Hyde Smith in Tupelo Mississippi

The announcement anxious GM workers who could lose their jobs.

At the height of the Global Financial Crisis, General Motors received a government bailout that eventually cost U.S. taxpayers $US11.2 billion ($15.5 billion in today's money). The earlier rally was linked to Chief Executive Officer Mary Barra's plan to boost cash flow by shutting plants in the USA and Canada and jettisoning slow-selling sedans from the lineup. OH will be a key state in the 2020 presidential campaign.

"We've done this to help you and I think his disappointment is, it seems like that they kind of turned [their] back on him."

Jerry Dias, the president of Unifor, had even harsher words for GM.

GM and its rivals are facing rising bills for technological transformation, increased risks from U.S. trade policy and investors reluctant to fund their traditional product strategies.

General Motors' decision to idle five plants, trim its salaried workforce by 15 percent and cease North American production of six different models sparked outrage on both sides of the US-Canadian boarder.

Ms Barra's gamble to cut the core business and bet on self-driving taxis "is a huge risk", said Maryann Keller, a longtime industry analyst with a self-titled consulting firm in Stamford, Connecticut.

While industry-wide passenger auto sales were down 13.2 percent through the first nine months of the year, pick-up truck and SUV sales rose 8.3 percent. The Detroit-based company's shares surged. It will also stop building several models now assembled at those plants, including the Chevrolet Cruze, the Chevrolet Volt hybrid, the Cadillac CT6 and the Buick LaCrosse.

China has become an increasingly important market for the automaker and in the first nine months of 2018, it sold 2.7 million cars in China compared to 2.6 million in all of North America.

Plants without products include assembly plants in Detroit; Lordstown, Ohio; and Oshawa, Ontario.

Also, GM is getting close to the point at which the EV tax credit starts to phase out.

"He's looking into what those options might look like", she said. Kudlow said. "We are going to be looking at certain subsidies regarding electric cars and others, whether they should apply or not". "Lordstown has been part of the GM family for more than 50 years so it's painful to see this happen to the plant's workers, their families and the community". The expenditures to bring those vehicles to production will start to hit with new batteries and body architectures created to generate profits.

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The maneuvers by GM amount to a major restructuring, and it's still too soon to say what kind of long-term impact it will have on the company's stock price.

What that would look like wasn't immediately clear: electric vehicles are eligible for a US$7,500 federal tax credit, but neither the president nor Kudlow provided additional details as to whether that's what they're reconsidering.

Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans.

Ms Barra said the company faced challenges from tariffs but she did not directly link the layoffs to them.

The moves are meant to shift resources to investing in electric and autonomous vehicles and to prepare for a downturn in the auto market, the automaker said.

"He obviously is suggesting that the bailout by the US taxpayer should factor into GM's motive and what they do". Another two will close outside North America.

Mary Barra, CEO of General Motors, says the job cuts are in order to invest in future technologies. The fall in new auto sales has troubled auto makers at a time when mainstays of the industry - private ownership and the internal combustion engine - are threatened by plans for shared vehicle schemes and electric cars.

White House economic adviser Larry Kudlow said at Tuesday's White House press briefing that he met with Barra on Monday to talk about the layoffs.

Speaking to reporters Monday, Trump said that he was "not happy" about the decision.

GM said the moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.

The No. 1 US automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America, with the aim of reducing headcount by 18,000. He said it was "clear" that GM "doesn't respect" the Lordstown workers, and slammed the vehicle company for not doing enough to reinvest the savings from its tax cuts. The US$6 billion in savings includes cost reductions of US$4.5 billion and lower capital expenditure annually of nearly US$1.5 billion.

The U.S. government gives auto companies a $7,500 federal tax credit for every electric vehicle that GM sells, up to 200,000 vehicles.

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