Just to be clear, General Motors is one “wrong” move away from a scenario that sees Donald Trump attempt to commandeer the company’s strategic vision and reshape it in the MAGA image.
Monday’s announcement that the company will be slashing 14,000 jobs, shuttering plants and doing away with models that aren’t selling was received warmly by markets. The shares surged nearly 5%, for their fifth best day of 2018.
CEO Mary Barra pitched the momentous decision as an effort to ensure that the company remains nimble in the face of shifting consumer preferences and she also tacitly suggested that the best is probably behind us in terms of the U.S. economy.
Barra emphasized investments in electric cars and autonomous vehicles and explicitly stated that the time to implement these changes is now, while the company and the economy are still strong.
The Trump administration is not amused. Context is critical here and I don’t just mean with regard to GM’s brush with death in 2009. Rather, I mean with regard to the company’s relationship with Donald Trump.
Back in June, GM warned the Commerce Department that Trump’s tariffs were likely to mean job losses in America, something trade hawks like Peter Navarro did not want to hear. In an absurd CNN interview aired in late June, Navarro accused GM (and Harley) of “speaking through forked tailpipe”, for instance.
But let’s trace the history back a bit further.
Early last year, Trump hosted the CEOs of GM, Ford and Fiat Chrysler in a push to promote American manufacturing. “We have a very big push on to have auto plants and other plants – many other plants,” he said at the start of that meeting, adding that “it’s happening.” Here’s what he tweeted after that meeting, just for old time sake:
A little over a year later, Trump famously took credit for GM’s decision to shutter one of its plants in South Korea. Here’s the clip, from February:
The problem? That had nothing to do with Trump. Here’s what GM said the day after Trump made those comments:
The announcement is related to our need to restructure our business in South Korea. Depending on the outcome of those restructuring efforts there could be broad global implications but as we said yesterday we need the full engagement of all stakeholders with a sense of urgency.
In short, Trump has variously attempted to get GM on board the MAGA wagon and that effort hasn’t always been entirely successful. Sometimes, the company has made him look foolish, although probably not by design.
Monday’s news is a grievous blow to Trump’s contention that his policies are the only protection the American blue collar worker will ever need. GM’s announcement confirms many of the realities that Trump spends every waking hour attempting to downplay. It thus comes as no surprise that he’s furious. Here’s what he told reporters on Monday in the latest edition of America’s favorite daytime talk show, “Chopper Talk”:
And that was tame by comparison to comments published by the Wall Street Journal on Monday afternoon. As alluded to here at the outset, Trump sounds like he will attempt to strong arm the company if Barra doesn’t “fix” this situation. Here’s what he said in the interview:
They better damn well open a new plant there very quickly. I love Ohio. I told them, ‘you’re playing around with the wrong person. I said, ‘I heard you’re closing your plant’. It’s not going to be closed for long, I hope, Mary, because if it is you have a problem.
Not to put too fine a point on it, but that is unconscionable and rife with irony. Trump is effectively suggesting that he will pressure GM into making decisions that run counter to what management believes is necessary to ensure the company doesn’t run into trouble. To support his bellicose stance, the President is citing all that the government has done for GM, but the whole point of the company’s strategy is to make sure GM remains viable so that it doesn’t end up needing help again.
Of course Trump doesn’t care about the viability of GM or about the thousands of workers who are about to lose their jobs. All Trump cares about here are the optics and the extent to which this undermines his efforts to lean against economic reality by insisting that he can roll back the clock to a bygone time when these American industrial giants were the envy of the world. That was never realistic and paradoxically, his policies on trade are undermining companies like GM and Harley, something executives have tried desperately to communicate over the past 12 months.
At a 2017 rally held just miles from Lordstown (the location of one of the factories targeted for closure), Trump said this:
I said, those jobs have left Ohio. They’re all coming back. They’re all coming back. Don’t move, don’t sell your house.
How’s that working out, sir?
Predictably, GM is being cast as the villain here, and not just by Trump. Ohio Democrat Tim Ryan characterized the news as a “bad combination of greedy corporations and policy makers with no understanding of economic development.” The latter is a jab at the President, but the “greedy” label was also applied to GM by Ohio Senator Sherrod Brown. “[It’s] corporate greed at its worst”, Brown said.
These folks can rant and rave all they want, but the bottom line here is that this is what happens when capitalism meets economic reality meets a snake oil salesman peddling dreams to disaffected blue collar workers.
In any event, you can expect Trump to ratchet up the rhetoric going forward and you shouldn’t be surprised if you look up six months from now and discover that “America first” entails casting America’s most iconic brands as public enemy No. 1.