Carmaker to shut down plants due to tensions, poor sales
U.S. carmaker General Motors' plan to lay off thousands of workers in the U.S. and Canada and shut down several factories has dealt another huge blow to President Donald Trump's inward "America First" policy, which has led to rising tensions between the U.S. and its major trading partners.
While Trump sought to come clean and pressure the carmaker to change course or take remedial action, GM's decision has highlighted the mounting challenges for the U.S. to rebuild its manufacturing sector by taking protectionist measures and fighting with other economies, experts said on Tuesday.
The carmaker announced on Monday that it would shut down several plants in 2019, including four in the U.S. and one in Canada and cut up to 14,800 jobs, as part of the company's restructuring plan to shift focus to the development of electric and autonomous vehicles.
"Regardless of the specific reasons behind the decision, it's no doubt a huge blow to Trump's plan to revive U.S. manufacturing sector," Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told the Global Times on Tuesday.
He said that while Trump's plan to bring back manufacturing jobs to the U.S. sounds very good, it is a very bumpy road that might lead to nowhere given the U.S.' relatively high labor costs and lack of a complete supply chain. "[GM's decision] laid bare those difficulties."
In its announcement, GM framed the move as a way of getting ahead in changing market trends, but Trump's trade frictions with its trading partners, including China, Canada and the EU, may have contributed to GM's decision, according to Mei Songlin, vice president and managing director of China operations at U.S.-based auto industry consultancy JD Power.
"Not just the trade war between China and the U.S., but rising global trade frictions have pushed up costs for companies such as GM. This may be one of the main factors behind GM's decision," Mei told the Global Times. He pointed out that U.S.' decision to impose tariffs on aluminum and steel has "definitely" propped up costs.
In an interview with the Wall Street Journal on Monday, Trump claimed that GM's decision "had nothing to do with tariffs" and threatened to get tough on GM if it doesn't open new plants in Ohio.
"It's not going to be easy to bring back manufacturing jobs just by issuing threats or fighting with others," Wang said.
Mei noted that GM's decision also showed an increasingly competitive global auto market with a much bigger appetite for new energy vehicles and self-driven cars. "It is a proactive measure taken by GM to adjust to changes in the global auto market," he said.
When asked about how the plan would affect GM's operations in China, a spokesperson for GM China only referred to the press release.
GM sales in China have been suffering in recent months. In the third quarter of 2018, GM sales in China were down 14.9 percent from a year earlier to 835,934 units, the company said in October.
