Trump warns GM could lose subsidies over layoffs


President Trump had a simple suggestion for General Motors, which is looking to lay off thousands of works and possibly put plants up for closure in order to focus on the production of electronic vehicles: "Make a better auto".

According to The Wall Street Journal, Trump told the GM chief executive Mary Barra that she should stop making cars in China and open a new plant in OH to replace the one that is ending production.

Shares of GM, the largest automaker in the USA which sells the Chevrolet, Buick, Cadillac and GMC brands, rose almost 6 percent on the news to $37.93 in midday trading Monday. Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, the Chevrolet Impala and Volt, and the Cadillac CT6, all slow-selling cars.

"We are now looking at cutting all @GM subsidies, including. for electric cars", Trump wrote.

Last month, as GM reported a US$2.5-billion third-quarter profit, the automaker also said it was aiming to cut costs by offering buyouts to roughly 18,000 white-collar workers with 12 or more years of service.

While GM has been increasing its focus on highly popular trucks and SUVs, the company said in a statement it would also prioritise investment in "next-generation battery-electric architectures".

While boss Mary Barra insisted the firm is positive about the future, the plan will send a chill through markets, given Cadillac and Chevrolet maker GM's traditional role as a bellwether for the USA economy. It was about 50 percent cars just five years ago.

Even as Tuesday's briefing was taking place, Trump tweeted an ominous threat to withdraw all General Motors subsidies in retaliation for the cuts. Democratic Ohio Senator Sherrod Brown, who won re-election earlier this month championing numerous same positions on trade as Trump, said the president has failed to act. I said: 'I heard you're closing your plant.

The US automaker explained its decision as a response to a slowdown in new-car sales, as well as to consumers shifting toward pickup trucks and sport-utility vehicles. The assembly plants are in Detroit; Lordstown, Ohio; and Oshawa, Ontario.

Tax legislation unveiled by House Republicans Monday didn't include an extension of the electric-vehicle tax credit sought by the coalition that includes GM and Tesla.

Barra said that the goal was to make the company more efficient.

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The iconic but sorely controversial Detroit-Hamtramck factory is among five facilities that will be shut down, pending talks with the relevant workers' union, starting next year.

But those expansions aren't enough to accommodate all of the roughly 3,300 US factory workers who could lose their jobs.

The maneuvers by GM amount to a major restructuring, and it's still too soon to say what kind of long-term impact it will have on the company's stock price.

Barra, 56, is convinced enough of the need for GM to slim down that she was willing to risk immediate political backlash from U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau.

During the financial crisis a decade ago, the U.S. Treasury Department kept GM alive by investing $49.5 billion in both equity and debt, giving the automaker the only financing available to get through bankruptcy.

"I don't know how I'm going to feed my family", Matt Smith, a worker at the Ontario factory, said Monday outside the plant's south gate, where workers blocked trucks from entering or leaving.

About 6,000 factory workers could lose jobs in the US and Canada, although some could transfer to truck plants.

It's not clear precisely what action against GM might be taken, or when, and there are questions about whether the president has the authority to act without congressional approval.

Many of those who will lose jobs are now working on conventional cars with internal combustion engines.

"Everything is up in the air", she said. However, this subsidy goes away once an auto maker reaches 200,000 electric cars sold.

Trump has long promised to return manufacturing jobs to the United States and particularly the Midwest.