Trump's Demand to Reopen Ohio GM Plant Plays to Politics, Not Business Realities: Expert

March 19, 2019

By Amanda Weston

President Trump blasted General Motors on Twitter over the weekend for its move to close a plant in Ohio, but his campaign to reverse the decision is more likely to help him politically than change the business reality, according to an expert from the Center for Automotive Research.

"Ohio's a very important political state to the president, and this job loss in Ohio is significant," said Kristin Dziczek, VP of industry, labor, and economics at the Center for Automotive Research.

"The plant, the General Motors Lordstown plant, has 450,000 units of capacity of automotive production, has about 1,800 workers on its last shift that's working there, so it would be a considerable loss to that community and may affect his political fortunes in the state."

In a series of tweets on Sunday and Monday, Trump demanded that GM CEO Mary Barra either start negotiations with the UAW immediately to save the jobs, sell the plant to another company, or close a facility in China or Mexico instead.

GM ($GM) issued a response after Trump's initial tweets on Sunday.

"To be clear, under the terms of the UAW-GM National Agreement, the ultimate future of the unallocated plants will be resolved between GM and the UAW," GM said in the statement.

Dziczek said GM isn't going to do anything that doesn't make business sense.

"They're looking at, 'where do we allocate product? What kinds of products are we building in the U.S. market? And how do we staff up? What kind of investment do we make for automation perhaps in those plants?' So there's a whole lot of moving pieces here and it doesn't move quickly," Dziczek said.

"And I know part of the president's demands this weekend were, 'I want it done, and I want it done fast. I want you to sell it to another company that's going to come and make cars.' Well none of this happens fast," she added. "And the scale of investment, the timeline of product investment and turnaround is years and not weeks. So none of this is going to happen fast."

In his tweets, the president did not mention any role recent tariffs may have played when it comes to the auto industry. Dziczek said the U.S. is now paying the highest prices for steel and aluminum in the world.

"We have a lot of uncertainty around whether the new NAFTA agreement, the USMCA, is going to be ratified by the Congress this year," Dziczek said. "There's some concern about ongoing trade talks with Japan, with the EU, with the UK, with China. All of that affects the auto industry, and so we've seen investment in this industry has really slowed down."

Dziczek said there's usually nearly $4 billion per quarter in automaker investment in the industry, but that number has dropped to less than $2 billion since the beginning of 2017.

"Automakers are kind of sitting on their hands and waiting to see what the rules of the game are going to be before they put down billions of dollars of investment in plants that are going to last for decades," she said.

For full interview click here.