Trump’s latest US corporate Twitter target: General Motors
DETROIT – In another tweet targeting a U.S. company, President-elect Donald Trump threatened Tuesday to slap a tax on General Motors for importing compact cars to the U.S. from Mexico.
But GM imports only a small percentage of its Chevrolet Cruze small cars from Mexico, with the vast majority made at a sprawling factory complex in Lordstown, Ohio, east of Cleveland.
Trump tweeted early Tuesday that GM is sending Mexican-made Cruzes to the U.S. tax-free. He told GM to make the cars in the U.S. “or pay big border tax!”
GM imports only hatchback versions of the Cruze from a factory in Ramos Arizpe, Mexico, and it sold only about 4,500 of them in the U.S. last year, spokesman Patrick Morrissey said. The company sold about 172,000 Cruzes through November. The hatchback, which went on sale in the U.S. in the fall, is built in Mexico for global distribution, Morrissey said.
Cruze hatchback production amounts to less than a day of output at the Lordstown plant, said Glenn Johnson, president of a United Auto Workers union local at the factory. The union, he said, is not protesting the move to build the hatch in Mexico.
“It makes for news, that’s all,” Johnson said of Trump’s tweet. The Lordstown factory, he said, is not equipped to build the hatchback model.
Trump spokesman Sean Spicer said the GM tweet wasn’t about just one company. “I think he generally made it very clear he wants to bring American jobs home. He doesn’t want jobs to leave this country,” he said.
Immediately after the tweet, which was posted around 7:35 a.m., GM shares fell about 1 percent in premarket trading. But by early afternoon they had rebounded and were up 0.5 percent to $35.01.
The tweet was the latest threat from Trump to tax companies that move production to Mexico and ship products back to the U.S. Trump’s targets have ranged from U.S. retailers and defense contractors, to tech companies. Amazon.com, Boeing and Macy’s have been the subject of Trump tweets in the past.
Last year Trump went after Ford Motor Co. for plans to shift production of the compact Focus to Mexico. Jobs at the Detroit-area factory that now makes Focuses would be preserved because the plant is to get a new small pickup truck and SUV.
Ford announced Tuesday that Focus production is still going to Mexico, but it would scrap plans for a new $1.6 billion plant in Mexico. Instead, it will invest $700 million at a Michigan plant to make autonomous and electric vehicles, creating 700 U.S. jobs.
Last year Trump touted a deal to keep 800 jobs at the Carrier furnace factory in Indianapolis from going to Mexico. He has promised to lower corporate tax rates to preserve factory jobs inside the United States, while threatening harsh penalties for companies that produce goods overseas to save on labor costs. On Twitter, Trump warned that he will impose a 35 percent tariff on the goods imported by companies that outsource production.
Nearly every automaker produces small cars in Mexico to take advantage of lower labor costs. Companies have said it’s difficult to make lower-margin small cars profitably in the U.S. due to higher wages here.
Last year, GM, Ford and Fiat Chrysler made about 1.6 million vehicles in Mexico, about 17 percent of the vehicles produced overall in North America, according to the Center for Automotive Research in Ann Arbor, Michigan. That’s projected to rise to 2.5 million, or about 26 percent, by 2022. Automakers and parts supply companies have added 12,000 U.S. jobs in the past year, according to government statistics.
GM did import some Cruze sedans from Mexico last year to meet demand as it was rolling out a new version of the compact car, Morrissey said, but that has stopped and all sedans sold in the U.S. are now made in Ohio, he said.
In November, GM said it would lay off about 1,250 workers at the Lordstown plant due to sagging demand for cars as U.S. buyers take advantage of low gasoline prices to buy trucks and SUVs. The workers on the third shift at Lordstown will go in indefinite layoff starting Jan. 23, although some may move to other GM factories.
Workers on two shifts will continue making the Cruze in Ohio even though its sales were down more than 18 percent through November.
Shifting demand from cars to trucks and SUVS is forcing General Motors to lay off more than 2,000 workers. Last month, 61.5 percent of U.S. new vehicle sales were trucks and SUVs, according to Autodata Corp., and analysts say there’s no sign that will change anytime soon.
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