EDITORIAL: General Motors, the president and the marketplace
Donald Trump went into high dudgeon this week after General Motors revealed it planned to shutter five manufacturing plants and reduce its workforce. But the announcement should be a stark reminder to the president that the realities of the marketplace often defy political conveniences.
On Monday, the auto giant said it would cut its salaried U.S. workforce by 15 percent, including almost a quarter of all white-collar jobs. It will also stop production on a number of models, particularly sedans, necessitating plant closures. GM said it will focus on what it sees as the future — electric vehicles and self-driving automobiles.
Mr. Trump, for whom subtlety remains a mysterious concept, responded as expected. “You’re playing around with the wrong person,” he said, directing his ire at the company’s CEO, Mary Barra. By Tuesday, he was threatening GM’s federal subsidies, which are largely directed toward encouraging electric car production.
It’s probably wouldn’t pass constitutional muster to single out GM for punishment. But eliminating taxpayer handouts to all the auto manufacturers and the wealthy buyers of zero-emission vehicles would be welcome and long overdue. Let such products compete in a marketplace free of bureaucratic distortions.
As Reason magazine’s Matt Welch pointed out his week, “Just because politicians have for many decades now treated automakers like public utilities doesn’t mean that they are. There is no guaranteed customer base or revenue stream.”
Indeed, sales of sedans have tanked in recent years for all manufacturers thanks to affordable gasoline prices and the increased popularity of SUVs and trucks. The main reason GM continued to build some of the targeted models in the first place was to meet federal regulatory demands involving fleet mileage standards. Its decision to devote more resources to electric vehicles — which also don’t make any money at this point — will accomplish the same end with more upside. It will also potentially give GM a leg up in China, the company’s largest market and where the government has imposed hefty clean car quotas.
Perhaps Mr. Trump can convince Ms. Barra to be more sensitive to the loss of U.S. manufacturing jobs in struggling communities. But he might also consider that his tariffs on steel, aluminum and other items have imposed large burdens on automakers, forcing them to make difficult financial choices regarding costs, supply chains and production.
Ultimately, the direction of General Motors should be in the hands of its CEO, board of directors and shareholders, not the president and grandstanding Washington officials. Mr. Trump’s instinct will no doubt be to bluster and perhaps to use the regulatory state to intervene. The latter would almost certainly cost more jobs than it would save.
