THE RED FLAG PRESENTS: PART THREE FEAR AND TARRIFS

Trump considering 'all options' on steel, aluminum imports

WASHINGTON- weighting trade sanctions, President Donald Trump said Tuesday he's “considering all options” to address an influx of cheap aluminum and steel imports.

        In a meeting with lawmakers, the president said he would soon make a decision on whether to slap “tariffs and/or quotas” on aluminum and steel imports by arguing they pose a threat to national security.

USA TODAY, February 14, 2018 NATION & WORLD WATCH

Bob Woodward in Fear: Trump In The White House (2018) writes that in a meeting in January 2018, Peter Navarro, Wilbur Ross, Gary Cohn and Roger Porter gathered in the Oval Office.  After months of arguing about tariffs from entrenched positions, debates had become heated and sharp.

Cohn, backed by Porter, rehashed the economic arguments and the geopolitical national security arguments.  He talked about how tariffs risked roiling the markets and jeopardizing a lot of the stock market gains.  He said the tariffs would be, in effect, a tax on American consumers.  Tariffs would take away a lot of the good that Trump had done through tax and regulatory reform.

 

You're the globalist, Trump said.  I don't even care what you thin anymore, Gary.

 

Navarro and Porter picked up the debate, with Ross interjecting on Navarro's side from time to time.  Navarro argued that tariffs would raise revenues and be beloved by businesses and unions.  He said it would be a great way for Trump to get union support and help his base in advance of the 2018 midterm election.

 

Porter brought up the Bush tariffs and the net job loss that has occurred.  In the years since, Porter argued, downstream industries that consumed and relied on steel—builders and pipelines and the auto industry—had expanded, while there was little potential for expansion of steel manufacturing and production jobs.  The job losses under new tariffs would be even more pronounced than the ones during the Bush administration.

 

Porter said Navarro's belief that tariffs would be met with wide-spread acclaim was “just dead wrong.”  Many businesses would oppose tariffs because they were buyers and consumers of steel.

 

“The automakers are going to hate this,” Porter said.  “They have narrow margins, and this is going to raise their costs.”  Pipeline makers too.  “We're opening up all of these new federal public lands and offshore drilling.  It requires people building pipelines.

 

“And the unions,” Porter said.  “Well, that's crazy.  Sure, the steel union is going to love this, but the United Auto Workers isn't going to like this.  It's going to up their costs.”

General Motors To Cut Over 14,000 Workers, Shut Down Plants

In this April 25, 2017, photo, a GMC truck sits in a General Motors dealer's lot in Nashville, Tenn. (AP Photo/Mark Humphrey)

In this April 25, 2017, photo, a GMC truck sits in a General Motors dealer's lot in Nashville, Tenn. (AP Photo/Mark Humphrey)

With Jane Clayson

General Motors announced Monday plans to cut around 15 percent of its salaried workers, end production at five plants and stop making several car models.

Guest

Michelle Nicks, reporter at NBC 21 News, WFMJ. (@MichelleNwfmj)

Sam Abuelsamid, senior analyst at Navigant Research in Detroit and a former automotive product development engineer. (@samabuelsamid)

From The Reading List

USA Today: "GM poised to close plants in Michigan, Ohio, Maryland, will cut 15%..." — "General Motors is poised to end production at five plants in the U.S. and Canada, kill off several passenger cars – including the Chevrolet Impala – and slash 15 percent of its salaried workforce in a sweeping cost-cutting plan designed to boost profits and adjust to America's changing tastes in vehicles.

"The Detroit-based automaker said it would end production by the end of 2019 at its Lordstown Assembly plant in northeast Ohio, its Detroit-Hamtramck Assembly plant in southeast Michigan, its Oshawa Assembly plant in Ontario, its Baltimore Operations parts plant in Maryland and its Warren Transmission Operations plant in southeast Michigan.

"The moves reflect the stark consumer shift to SUVs, crossovers and pickups. All of the GM plants on the chopping block make passenger cars.

"The company will also discontinue the Chevrolet Cruze and Volt in North America as well as the Buick LaCrosse, Cadillac XTS and Cadillac CT6.

"While sales of those models were suffering, they continued to support thousands of jobs. GM has about 1,500 employees at the Detroit plant, 1,600 at the Lordstown factory and 2,500 in Oshawa."

Time: "GM Is Laying Off 14,000 Workers As it Looks to Cut Costs Amid Restr..." — "General Motors will cut up to 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles, the automaker announced Monday.

"The reductions could amount to as much as 8 percent of GM’s global workforce of 180,000 employees.

"The restructuring reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65% of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50% cars just five years ago."

This program aired on November 27, 2018.  http://www.wbur.org/onpoint/2018/11/27/general-motors-cuts-workers-...

Porter ordinarily tried to remain an honest broker who facilitated the discussion.  When he had a strong view, he tended to wait until he was one-on-one with the president.  Now he was outing himself as a free trader.

 

Porter left the White House on February 7 after two ex-wives went public with allegations that he had physically abused them.  One released a photo showing a black eye that she said Porter gave her.  Each, one to the press and one in a blog post, gave graphic descriptions of domestic abuse.

 

On the night of Wednesday February 28, Commerce Secretary Wilbur Ross and Peter Navarro went to the Oval Office and convinced the president to move ahead with steel tariffs before the 301 investigation was complete, imploding the whole trade strategy.

 

JILL SLIGANGER ON GENERAL MOTORS SHUT DOWN: HERE & NOW 11/26/18

 

Ross had earlier produced a study maintaining that the rising imports of steel and aluminum were a threat to the national security, giving Trump the authority to impose them without Congress.

 

Ross and Navarro had arranged for the main U.S. Steel executives to come to the White House the next day.

 

Cohn tried to kill the meeting, and for a while he thought he had succeeded.  But then it was back on.

 

More than a dozen executives showed up the next day.  At a meeting in the Cabinet Room, Trump announced that he had decided to impose a 25 percent tariff on foreign-made steel and 10 percent on aluminum.

 

“You will have protection for the first time in a long while,” Trump told the executives.  “And you're going to re-grow your industries,” he said, even though all the data Cohn had gathered showed it was not practical or even possible.

 

Cohn believed if they had completed the work on the intellectual property case against China, they would have had the allies on board for a blockbuster trade case.  It would have been most of the world against China.  Their economic rival would be isolated.  Steel tariffs upended all of that.

 

Cohn concluded that Trump just loved to pit people against each other.  Their president had never been in a business where he had to do long-term strategic thinking.  He went to see Trump to explain that he was resigning.

 

Later, after he resigned, Cohn worried about instability in the economy that would come from tariffs and the impact on the consumer.  The U.S. Is a consumer-driven economy.  And if the consumer is unsure of what the economy will look like and what their disposable income will look like, that will be seen very quickly in the economy and in the stock market.

G.M. to Idle Plants and Cut Thousands of Jobs as Sales Slow

  • Nov. 26, 2018

General Motors announced Monday that it planned to idle five factories in North America and cut roughly 14,000 jobs in a bid to trim costs. It was a jarring reflection of the auto industry’s adjustment to changing consumer tastes and sluggish sales.

The move, which follows job reductions by Ford Motor Company, further pares the work force in a sector that President Trump had promised to bolster. Referring to G.M.’s chief executive, Mary T. Barra, he told reporters, “I spoke to her and I stressed the fact that I am not happy with what she did.”

Mr. Trump also invoked the rescue of G.M. after its bankruptcy filing almost a decade ago. “You know, the United States saved General Motors,” he told reporters, “and for her to take that company out of Ohio is not good. I think she’s going to put something back in soon.”

In addition to an assembly plant in Lordstown, Ohio, the cuts affect factories in Michigan, Maryland and the Canadian province of Ontario.

Part of the retrenchment is a response to a slowdown in new-car sales that has prompted automakers to slim their operations and shed jobs. And earlier bets on smaller cars have had to be unwound as consumers have gravitated toward pickup trucks and sport-utility vehicles as a result of low gasoline prices.

In addition, automakers have paid a price for the trade battle that Mr. Trump set in motion. In June G.M. slashed its profit outlook for the year because tariffs were driving up production costs, raising prices even on domestic steel. Rising interest rates are also generating headwinds.

Ms. Barra said no single factor had prompted G.M.’s cutbacks, portraying them as a prudent trimming of sails. “We are taking these actions now while the company and the economy are strong to stay in front of a fast-changing market,” she said on a conference call with analysts.

Workers leaving the General Motors factory in Lordstown, Ohio, on Monday. “For her to take that company out of Ohio is not good,” President Trump said of G.M.’s chief executive, Mary T. Barra.CreditAlan Freed/Reuters

The idling of the five plants next year will result in the layoff of 3,300 production workers in the United States and about 2,500 in Canada. The company also aims to trim its salaried staff by 8,000. The cuts represent more than 10 percent of G.M.’s North American work force of 124,000.

Investors welcomed the news, sending G.M.’s shares up 4.8 percent to their highest closing price in about three months.

Word of the cutbacks in Canada had surfaced over the weekend. Just before G.M.’s announcement, workers walked out of the plant in Oshawa, Ontario, into a driving rain. Waving red flags and clad in ponchos bearing the logo of their union, Unifor, they began blockading truck entrances.

Comment of the Moment

Paul Shindler commented November 26
Paul Shindler
Paul Shindler
Times Pick

Obama saved the auto industry and Trump seems to be slowly killing it. A record making economic growth path under Obama is now in serious jeopardy. The Trump trade wars are a reckless, serious gamble with our future, and nobody seems to know where things are headed. China is on a steady path to overtake America as the biggest economy, and they have a lot more clout than Trump thinks. GM is a great American company and I wish them the best of luck.

Prime Minister Justin Trudeau said he had expressed his “deep disappointment” about the closing to Ms. Barra.

The United Auto Workers, representing workers at the American plants, said G.M.’s move “will not go unchallenged.” Closing domestic plants while expanding production in China and Mexico is “profoundly damaging to our American work force,” said the union vice president in charge of negotiations with G.M., Terry Dittes.

The plants include three car factories: one in Lordstown that makes the Chevrolet Cruze compact; the Detroit-Hamtramck plant, where the Chevrolet Volt, Buick LaCrosse and Cadillac CT6 are produced; and the plant in Oshawa, which primarily makes the Chevrolet Impala. In addition, the company will halt operations at transmission plants in the Baltimore area and in Warren, Mich.

G.M., Ford and Fiat Chrysler are all poised to negotiate new labor contracts next year. Some of the affected G.M. plants could resume production, depending on the outcome of the bargaining. Carmakers often agree to keep plants open in exchange for other concessions from the union.


 
General Motors employees hugging while staging a blockade and protest at one of the entrances to the company’s plant in Oshawa, Ontario. G.M. said the plant would halt production next year.CreditIan Willms for The New York Times

Earlier this year, Ford said it would stop making sedans for the North American market and announced cuts in its work force. Fiat Chrysler stopped making small and midsize cars in 2016.

Closing auto plants outright — rather than idling them, as G.M. says it plans — has been rare since the industry emerged from the recession. The last permanent shutdown of a plant in the United States came in 2016 when Mitsubishi Motors shuttered one in Normal, Ill. Before that, Ford closed a truck plant in St. Paul in 2011.

More typically since rebounding from the recession, carmakers and their suppliers have restarted shuttered plants, adding new ones across the South and hiring tens of thousands of workers a year.

But demand for small and midsize cars has plunged. Two-thirds of all new vehicles sold last year were trucks and S.U.V.s. That shift has hit G.M.’s Lordstown plant hard. Just a few years ago, the factory employed three shifts of workers to churn out Chevy Cruzes. Now it is down to one. In 2017 the plant made about 180,000 cars, down from 248,000 in 2013.

More broadly, the yearslong boom in car and truck sales in North America appears to be ending, said John Hoffecker, vice chairman at AlixPartners, a global consulting firm with a large automotive practice. “Sales have held up well this year, but we do see a downturn coming,” he said. AlixPartners forecast that domestic auto sales will fall to about 15 million cars and light trucks in 2020, from about 17 million this year.

Even though they are facing a potential slump, carmakers continue to spend heavily to develop electric vehicles and self-driving technology, both to meet regulatory mandates and to anticipate the future of driving. That shift is expected to remake the global industry and enable companies to enter new and potentially lucrative businesses, such as driverless taxi and delivery services.

At the same time, automakers have had to contend with a new political agenda in Washington. One benefit has been the corporate tax cuts enacted last year. The changes, championed by Mr. Trump and his party, saved G.M. $157 million in federal taxes in the first nine months of the year, according to the company’s most recent quarterly earnings report.


The General Motors Lordstown plant in Ohio makes the Chevrolet Cruze compact. It has been hurt by plunging demand for small and midsize cars.CreditCreditAlan Freed/Reuters
  • Nov. 26, 2018

General Motors announced Monday that it planned to idle five factories in North America and cut roughly 14,000 jobs in a bid to trim costs. It was a jarring reflection of the auto industry’s adjustment to changing consumer tastes and sluggish sales.

The move, which follows job reductions by Ford Motor Company, further pares the work force in a sector that President Trump had promised to bolster. Referring to G.M.’s chief executive, Mary T. Barra, he told reporters, “I spoke to her and I stressed the fact that I am not happy with what she did.”

Mr. Trump also invoked the rescue of G.M. after its bankruptcy filing almost a decade ago. “You know, the United States saved General Motors,” he told reporters, “and for her to take that company out of Ohio is not good. I think she’s going to put something back in soon.”

In addition to an assembly plant in Lordstown, Ohio, the cuts affect factories in Michigan, Maryland and the Canadian province of Ontario.

Part of the retrenchment is a response to a slowdown in new-car sales that has prompted automakers to slim their operations and shed jobs. And earlier bets on smaller cars have had to be unwound as consumers have gravitated toward pickup trucks and sport-utility vehicles as a result of low gasoline prices.

In addition, automakers have paid a price for the trade battle that Mr. Trump set in motion. In June G.M. slashed its profit outlook for the year because tariffs were driving up production costs, raising prices even on domestic steel. Rising interest rates are also generating headwinds.

President Trump expressed unhappiness with General Motors’ announcement that it planned to idle five North American factories and cut more than 14,000 jobs.Published OnNov. 26, 2018CreditCreditAl Drago for The New York Times

The Trump administration has moved to scrap stringent emissions requirements put into place under President Barack Obama, but the industry hopes that Mr. Trump will relent and reach an agreement with California, which sets its own emissions requirements. Automakers are wary of having two sets of standards.

Before the election and after, Mr. Trump prodded Ford, G.M. and others to build plants in the United States instead of Mexico or China. As events have played out, however, his determination to rework the North American Free Trade Agreement is expected to have a modest impact on automakers, preserving much of the original 1994 accord.

The terms negotiated with Canada and Mexico stipulate that at least 75 percent of an automobile’s value must be produced in North America for a company to import it into the United States duty-free, and that 40 to 45 percent of a vehicle’s value must consist of parts made by workers earning at least $16 an hour, a provision aimed at shrinking Mexico’s wage advantage. Analysts believe the changes will have little to no effect on American jobs.

Over all, the American auto industry has added nearly 350,000 jobs since the industry bottomed out in the wake of the recession. But the industry still employs tens of thousands fewer people than before the crisis, and hundreds of thousands fewer than in 2000.

About 970,000 people worked in the United States auto industry in October, an increase of 12,800 since Mr. Trump took office. Most of that growth, however, came among manufacturers of recreational vehicles and trailers, as well as in auto parts. Through October, automakers like G.M. had cut about 7,000 jobs under Mr. Trump, government figures show. (Those numbers don’t include the hundreds of thousands of workers employed by auto dealers, repair shops and related industries.)

Ms. Barra said G.M. would set aside up to $2 billion in cash to pay for the job reductions announced Monday, and take noncash charges against its pretax earnings of about $1.8 billion. The charges will affect earnings in the fourth quarter of 2018 and the first quarter of 2019.

Until last month, G.M. had been offering severance packages to entice salaried employees in North America to leave the company. In January, the company plans to cut additional white-collar jobs on an involuntary basis. Between the two actions, it aims to eliminate about 15 percent of its salaried jobs in North America.

General Motors also said on Monday that it would stop production at two unspecified plants outside North America by the end of next year.


Ian Austen and Ben Casselman contributed reporting.

A version of this article appears in print on Nov. 26, 2018, on Page A1 of the New York edition with the headline: G.M. to Eliminate Some 14,000 Jobs At Five Factories.
tps://static01.nyt.com/images/2018/11/27/business
  • Nov. 26, 2018

General Motors announced Monday that it planned to idle five factories in North America and cut roughly 14,000 jobs in a bid to trim costs. It was a jarring reflection of the auto industry’s adjustment to changing consumer tastes and sluggish sales.

The move, which follows job reductions by Ford Motor Company, further pares the work force in a sector that President Trump had promised to bolster. Referring to G.M.’s chief executive, Mary T. Barra, he told reporters, “I spoke to her and I stressed the fact that I am not happy with what she did.”

Mr. Trump also invoked the rescue of G.M. after its bankruptcy filing almost a decade ago. “You know, the United States saved General Motors,” he told reporters, “and for her to take that company out of Ohio is not good. I think she’s going to put something back in soon.”

In addition to an assembly plant in Lordstown, Ohio, the cuts affect factories in Michigan, Maryland and the Canadian province of Ontario.

Part of the retrenchment is a response to a slowdown in new-car sales that has prompted automakers to slim their operations and shed jobs. And earlier bets on smaller cars have had to be unwound as consumers have gravitated toward pickup trucks and sport-utility vehicles as a result of low gasoline prices.

In addition, automakers have paid a price for the trade battle that Mr. Trump set in motion. In June G.M. slashed its profit outlook for the year because tariffs were driving up production costs, raising prices even on domestic steel. Rising interest rates are also generating headwinds.  https://www.nytimes.com/2018/11/26/business/general-motors-cutbacks...

Trump's action and mounting threats on tariffs were jarring.  Cohen thought that Trump had to know.  “But he's not man enough to admit it.  He's never been wrong yet.  He's 71.   He's not going to admit he's wrong, ever.”

END OF PART THREE OR US PROSPERITY?

Views: 30

Comment by mary gravitt on December 4, 2018 at 1:57pm

Trump came back from Argentina lying about his deal with the Chinese.  He want to pour oil on the GM waters, but GM knows that the tariff will drive the US and the World into a Recess at least and another Depression at most.

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