Why the General Motors plant closures are good for America and not so good for Donald Trump


Image result for 2019 cadillac ct6
2019 Cadillac CT6
One of the best cars on the road and discontinued

Toyota Camry has been the best selling car in America for more than two decades. In the last few years the Honda Accord was the second best selling car in America.    Last year, Toyota and Honda introduced all new versions of the Camry and Accord and while the cars two remain the best selling cars in America. Sales of the two cars are substantially lower than 2017. 

Its not just Toyota and Honda, most passengers cars are crawling off dealer lots.  With one exception, nearly every automaker is offering incentives to move  passenger cars off the lots as American tastes have shifted to SUV’s.  

Kelly Blue Book says passenger cars sales are down 12% this year. Autodata says passengers cars represented 32% of all vehicles sold this year. This is a major drop from 2015 when passenger cars represented 51%. 

General Motors has spent billions in developing new fuel efficient cars.     The newest generation Chevrolet Impala and the Chevy Cruise received some of the best reviews for the brand in decades.   Consumer Reports said the Impala was the best in class. And despite the good reviews both models are under preforming, selling fewer cars than the previous generation.  

General Motors revamped its stodgy Buick and Cadillac divisions with Cadillac building cars that can out maneuver Germany’s best.   The problem is no one wants the relatively new Buick Lacrosse and the Cadillac’s CT6.  

General Motors recently announced they were closing down five plants in North America.   The Lordstown Ohio plant that builds the Chevrolet Cruze. The Hamtramck Plant in Detroit that builds the Chevrolet Volt, Buick Lacrosse and the Cadillac CT6.   Transmission plants in Michigan and Maryland and the plant in Oshawa, Ontario that builds the Chevrolet Impala.  An estimated 14,000 workers will be affected.

Donald Trump is outraged. During his candidacy he promised to increase auto manufacturing jobs. To punish GM, he’s threaten to cut all subsidies. The President is particularly angry about the closing of the Lordstown Ohio plant,in state that overwhelmingly supported him in 2016.  It was a foolhardy promise, as no one can predict changes in the marketplace.   

While our president was tweeting, the auto industry changed.  Automakers like Volkswagen, Hyundai Kia and General Motors underestimated the popularity of the SUV’s and no one predicted the popularity of Tesla and Electric Car. 

Preparing for a New World

Some believe in the next few years fewer people in urban areas will purchase cars. A new generation is embracing ride sharing and other modes of transportation.  Technology is allowing millions to work from the home and the growing demand for Electric Cars may, require a                                                        different type of auto worker.                                                      

For years, domestic automakers ignored changes in the marketplace.  In the early 70’s Americans were attracted to the low prices and quality of the Japanese automakers.   The Ford, Chrysler and General Motors (The Big 3) responded with mediocre small cars.  The profits for the Big 3, was in large cars with V8 engines and trucks     

In 1973, (OPEC) The Organization of Petroleum Exporting Countries  stopped sending oil to the US. Resulting in fuel shortages and higher prices.   Buyers, of fuel efficient small cars, abandon Ford, Chrysler and General Motors for small cars at Toyota, Datsun (Nissan) Honda and Volkswagen. Many of them continued buying cars from the Japanese Automakers.

 When Gas Prices increased again in the early 2000′ American Automakers heavenly invested in SUV’s  Despite slowing sales American  Automakers continued to build over saturating the market.   The industry was to slow to react to changes in the industry, the demand for more fuel efficient cars and trucks. 

General Motors one of the largest automakers in the world and Chrysler needed a bailout loan from the government to remain in business.  

General Motors Positioning Itself for the Future

If the Donald Trump and Canadian Prime Minister Justin Trudeau had their way, GM would continue to build  unprofitable vehicles to keep their constituents employed. 

To avoid a catastrophic 2008 meltdown, General Motors and other automakers are being proactive. 

General Motors CEO Mary Barra  is implementing billions of dollars in cost-cutting measures in preparation for the next economic downturn. Shifting the company’s focus toward costly, emerging technologies such as autonomous and fully electric vehicles.  

 Shrinking its employee ranks is part of the plan, especially on the manufacturing side of its business, but GM also is sending a message that it’s working to change the makeup of the work force that remains.

“We are going to continue to hire, because when we look at the skill sets that we need for the future, the vehicle has become much more software-oriented, when you think about the hundreds of millions of lines of code that are in a vehicle that operates today,” “That’s only going to increase.”     Mary Barra

Just the first round……….

This is just first round of layoffs and plant closures.    Ford Motor Company is planning to stop building every sedan except the Mustang, and the Focus which will be built in China.   Unlike General Motors, Ford doesn’t plan to close any plants, however some shifts may be eliminated.  Most of Fords sedans are assembled in Mexico.   

Tesla and the new world order

A few years ago the California Air Resources Board required 15 percent of cars sold in California to be all-electric, plug-in hybrid electric or hydrogen vehicles.  This requirement would cost the industry billions in an untested market.  Billions more to build a hydrogen car.  Initially most of the industry converted gas engines for short range electric engines in existing models.    In 2010, GM Introduced one of the first plug in hybrids, the Chevrolet Volt, which allow the car to drive on pure electric power for up to 60 miles and then the car combustion engine powered the car and recharged the battery. 

Enter the California Fuel Cell Partnership:   In January 1999, two state government agencies—California Air Resources Board and California Energy Commission joined with six private sector companies—Ballard Power Systems, DaimlerChrysler, Ford Motor Company, BP, Shell Hydrogen and ChevronTexaco—to form the California Fuel Cell Partnership. Headquartered in West Sacrmamento.  The goal was to demonstrate and promote the potential for fuel cell vehicles as a clean, safe, and practical alternative to vehicles powered by internal combustion engines. Within a very short time, other government agencies and private businesses became members.  Today, the members include Hyundai, Volkswagen, Nissan, Toyota, Honda and General Motors.  Today there are three hydrogen fuel cell cars for sale in selected markets.  Honda Clarity, Hyundai Nexo and the Toyota Mirai. The challenge for hydrogen vehicles is suppliers of hydrogen and a network of fueling stations.  

In 2010 Nissan introduced the Leaf, one of the first all electric cars sold in several countries including the United States.  Nearly 400,000 Leafs has been sold globally.  Most of the Leafs sold in the US were sold in California.  Initially the Leaf had a range of less than 80 miles.  The newest models have a range of 151 miles.

In 2012, Tesla Inc. A small company in Northern California. Introduced the first full size luxury, all electric car called the Model S.  The standard Model S had a driving  range of 208 miles, more than double the Leaf . Buyers could  increase the driving range to over 300 miles by opting for a larger battery.  By 2016 the Model S was the second best selling electric vehicle in the world. 

While sales of nearly all combustion engines passengers cars are down.  Sales for Tesla’s Model 3 us up over 400%  It was the sixth best selling sedan last month in the United States. 

  American and Domestic automakers are investing more than 100 billion dollars to bring more electric and  hydrogen vehicles to the marketplace. 

The transition in the Auto Industry is troublesome for Donald Trump as some workers will not survive.   The proactive measures taken by Ford and General Motors to avoid a repeat of the 2008 meltdown may not be good for the President, however it is good for America. 

CityFella 

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