The Brian Sullivan Blog
  • January 26, 2009 11:26 AM EST by Brian Sullivan

    GM Sends a Message to the President by Cutting More Jobs

    The UAW must be feeling betrayed.   At nearly the exact time the President announced he will push for tougher fuel economy standards, General Motors announced it will idle more plants and fire more workers.    The timing of that GM announcement is likely not accidental.

    The President began speaking about his push for higher fuel economy standards at 10:45am ET this morning.   Here is the Dow Jones story that crossed at 10:57am:

    U.S. President Barack Obama told the Environmental Protection Agency on Monday to reconsider California's request to regulate greenhouse gas emissions from cars, reversing the climate policies of former President George W. Bush. California's request, which was denied by the Bush administration, would allow it to impose stricter limits on vehicle carbon dioxide emissions, blamed for contributing to the global warming. If approved, more than 12 states could follow suit in imposing limits that are tougher than federal requirements. The president also directed the Department of Transportation to move forward with setting vehicle fuel efficiency standards for 2011 by March, giving automakers an 18 month period to impose them. He also instructed the U.S. government in general to become more energy efficient. "The days of Washington dragging its heels are over. My administration will not deny facts. We will be guided by them," he said.

    Meantime, the General Motors headlines about layoffs and plant closings began crossing at 10:37am, and the Dow Jones story below crossed at exactly 10:50am ET:

    General Motors Corp. (GM) on Monday said it will lay off 2,000 more workers this spring and schedule down time at most of its assembly plants in the face of declining sales. The downsizing is needed even though GM virtually halted production this month and slashed output by 20% in 2008. GM this spring plans to cut shift at a small-car factory in Ohio and a plant in Michigan that makes crossovers including the GMC Acadia and Buick Enclave, a company spokeswoman said. About 800 workers will be laid off in Ohio and 1,200 in Michigan. Additionally, GM is planning to idle 14 of its 24 North American assembly plans for a week or more in the second and third quarter.

    So let's get this straight: in the same economic environment that forces GM and Chrysler to borrow taxpayer money merely to stay alive, they will also be forced to spend huge sums to develop new engine technology?

    There is also the possible outcome that the carmakers will have to develop multiple engine technologies to meet various states' fuel economy standards (which may occur as a result of the revisitation of California's rules).   That would also add significantly to costs.

    As a nation we need to push for greater fuel economy and the reduction in the dependence on foreign oil.   But we need to time this move correctly, and do it when the car companies have enough free cash flow to cover the development costs.  GM's announcement 5 minutes before the President spoke is sending a very clear message.    The UAW - which gave a huge push to the Obama camp - cannot be pleased.

    By the way, one of the plants that GM is cutting a shift at is Lordstown, Ohio.   That is the plant that makes GM's highest fuel economy car, the Cobalt.

jay

Break the UAW and watch the US auto manufacturers start kickin ass! They cannot ever be competitive with the extraordinary burden of union costs and inefficiencies! GM, Ford and Chrysler make terrific cars, just not the most popular (today). How do these excessive costs hurt the automakers? They can never pay off their debts? They can't invest in better technology? They can't attract capital because they are losing so much money. It is so sad that the American Auto Worker doesn't recognize how they are being held back by the union bosses. Great employees get the same pay and benefits as the marginal ones. Come on America, start buying American as soon as the unions are busted. Hope for BK so those manufacturers can be released from the ball and chain of the union contracts!!!!

January 27, 2009 at 10:29 pm

earle

Your article pretty much covered all I would want to say,but GM's cutting a shift production from their plant in Lordstown,Ohio of the "Cobalt" is literally a slap in the face to President Obama! My personal opinion, Brian? President Obama is on a quest,and the man's visions,and dreams won't be deterred by the arrogance of "Detroit"! His goal is to ween us off foreign oil,rebuilding america's electric grid,and infrastructure to facillitate the future vehicles we envision as a reality in the not so far future. I firmly believe we can get their by helping new,and innovating start-ups,with government seed money finally going in the right direction. PS. Ethanol is a terrible solution for an alternate fuel,and should be aborted. Thanks JMHO

January 27, 2009 at 8:41 pm

Mr. G

Reality check! - Car sales in 2008 down approx. 34% across the board REGARDLESS of the type of car. - Consumer debt up 315% since 1989. People have run out of money and CANNOT AFFORD a car even if it gets 50 mpg. - Consumers will take 2-3 years to clean up this mess IF they start now and get really INTENSE. Then they can buy a car. - $700 Billion a year being spent to buy oil from countries that hate us! Conclusion: - There will be demand but GM better scale back and plan accordingly. Throttle back quickly and see how 2009 goes before revving up the engine again. - Oil is a limited resource. Get out from under these mobsters called OPEC as quick as we can. - I neither love nor hate Obama. He is untested which is why I didn't vote for him but he has my best wishes as does GM. We are all in the same boat. Mr. G, Dallas, Texas

January 27, 2009 at 7:04 pm

tom in SF

Let me see if I can predict one scenario that is most likely to happen. 1. in 2010, California raises it's weighted MPG avergage target to, lets say 30. That means of all the total vehicles that one manufacturer sells in that state, the weighted average has to be 30mpg. That means half get more, half get less than 30. When GM sees the real time sales for 24 mpg trucks will push the wieghted average over 30mpg, they will be forced to stop shipments of those most profitable trucks in their largest market (CA) until someone magically buys enough money losing 40 mpg "magic" models to keep the weighted average under 30. Shortage in CA of best selling truck, overstock of loser Cobalt or other brand. That will do wonders for the domestic automobile market. Nice payback to the union members who voted for Jobama.

January 27, 2009 at 3:50 pm

Patrick Norton

Being a tractor trailer company driver over the road it is common to run the rig 24/7 to keep the cab heated and cooled. The company I work for has over 5,000 rigs in operation everyday. The department of Transportation only allows a driver to drive 10 hours and sit idle 14 hours a day. The fleet managers are always complaining about budgets and fuel costs. If our government and big businesses were worried about air quality and budgets all these over the road drivers would be in motels during their rest periods. Your cars and SUV's are green compared to my companies tractor trailers and their fuel costs are more then motel costs. Some days I wounder why I am taking a load of California cheese to Wisconsin, or Boston made furniture to California, with the return trip to Boston with California made furniture. Most working class Americans purchases are on a budget; it is the yacht clubs that need these long haul exotic varieties. If the wealthiest of Americans would stop acting like spoiled children needing private jets for transportation and seventeen types of cheeses at their cocaine pool parties, you could keep your dum bass boat.

January 27, 2009 at 12:57 pm

Mondo

That's the best picture of GM you could come up with? A shot of a GM sign taken in a moving car on the highway?

January 27, 2009 at 10:05 am

Drive a Dodge

They will never have the free cash flow for development of more fuel efficient technologies. We have become a government dependant society, give the government your money, and let them decide who needs it. "Spread the wealth"

January 27, 2009 at 8:43 am

Trader55

I think it would be really funny if GM, Ford, and Chrysler just said no. Stop producing cars for the states that pass more stringent requirements. More layoffs and less taxes and fees for California. Try pulling that boat with a Prius.

January 27, 2009 at 8:15 am

TomV

This article and the comments so far haven't looked at other repercussions. Own a boat or have an ATV(s)? How are you going to haul them using a Toyota Prius? So say goodbye also to companies that make/sell boats etc. Taken a road trip w kids in a small car? Fun, wasn't it! So say goodbye to chunk of tourist industry. I see many other industries that will be impacted. CA and the other 12 states as well as our new President may figure forcing the issue, regardless of the impact on the auto companies is the only way to make things happen. But I'm hoping that those same states like the fact that their holier than thou attitude is going to have a lot more bill-payers than just the auto companies. There are some days when I think CA should do all the other 49 states a favor, have an earthquake, and slide into the ocean. Their lack of planning had them begging for power several years ago, and the state is broke and can't even pay it's bills. So why is our president allowing this disfunctional state to literally be the tail that wags the dog?

January 27, 2009 at 4:40 am

floyd

WHAT A LOAD OF CRAP. ONE COUNTRY? UNITER NOT DIVIDER? MORE HOT AIR FROM WASHINGTON. US AUTO MFGRS MAY CHOOSE NOT TO PRODUCE/SELL CARS IN THOSE STATES WHO IMPOSE SUCH IGNORANT AND DRACONIAN STANDARDS. GLOBAL WARMING BEING CAUSED BY HUMAN ACTIVITY, NOT ANY NATURAL CYCLE? WHAT ABOUT THE SCIENTISTS WHO DISAGREE? DO THEY NOT HAVE A POINT?

January 27, 2009 at 3:49 am

movers

It's a self fufilling proficy for big "O" give car companies money because they are going broke and then put in place laws that force those same companies into furter hardship so those same companies will have to come back to you (now in worse shape) to get more money and the big "O" gets more control over the autos (making them govt financed and controlled). I believe congress and the pres look at this as an opportunity to put in place controls that would never pass and or be agreed to by the autos if these companies did not depend on 100% on govt money for survival

January 26, 2009 at 7:19 pm

arby63

If I were an automaker I would bring business to a crawl and purge my ranks by 75% or better! I am hearing more and more small businesses doing exactly that! They would rather shutter the doors than give another dime or ounce of sweat to the Feds!

January 26, 2009 at 6:55 pm

Listening in Texas

Wanna see a car that runs on multi-fuel sources; look at Ford and VW in Brazil. They ALREADY know HOW to do it! They just DON'T. Obama doesn't control the public; at least yet to tell us what cars we can and cannot drive. Guess that is on NEXT year's agenda! He doesn't control investors who are pulling their money out of Wall Street. Let him just keep on the way he is going. We have less than 2 years before most of Congress is up for re-election. Let's see if America remains as silly as they did in this last election on who represents us. Maybe they will; or maybe the American public will actually get some sense of responsibility and TELL our representitives what THEY should be doing; not the other way around. We are stuck with this mess for a while.... God help us!! There is a small chance that Obama will decide to actually do what is RIGHT; not necessarily popular.... oh, I forgot who we are discussing.....

January 26, 2009 at 6:43 pm

Al

Obama logic - Problem: I cut my finger off! Solution: I'll get you a aspirin for that headache! Economic collapse and historic job losses? We must fund contraceptives and overseas abortions! Oh yeah, and get green too! The liberal agenda must be advanced, d*a -m-n the facts!

January 26, 2009 at 6:02 pm

Al

Can you say bankruptcy, baby!

January 26, 2009 at 5:56 pm

Bubba

You can’t force feed fuel efficient vehicles down consumer’s throats. If they wanted them manufactures would be producing them. American vehicles are as fuel efficient or better then imports in comparable product lines. You won’t see Obama or government driving a vehicle that gets over 35 mpg. They don’t want to drive one either, they just want to force us to drive them. Ethanol burns cleaner then gas but get less mpg the gas. We can produce ethanol and purchase it from South America. Require vehicles that can burn ethanol, back off mpg standards and require the oil company’s to produce fuel with a minimum of 20% ethanol. This will drive the price of oil down and over time require 85% ethanol fuel. It’s time to legislate what the oil company’s produce and let the automobile factory’s build what the consumers want. Producing what consumers want will bring them back to profitability

January 26, 2009 at 5:31 pm

beabout

Did congress not (under Bush) setup a 25 Bln fund for the purpose of alternative fuel engines/motors to power vehicles? Who among us (regular folks) did not see this instruction to the EPA from Obama coming if he were elected? Now how does this in any way make it harder for GM, Ford, and Chrysler to turn around their respective company ledgers considering the government is throwing money at them? Come on, the solution is to let these companies fly or fail on their own.

January 26, 2009 at 5:16 pm

john

what do you expect from the socialist you all voted in for president?? I am loving this.

January 26, 2009 at 4:11 pm

Bert

I used to collect old books. It was always interesting to see illustrations of London, Paris, New York etc. before the automobile. Heating was with coal and wood so air quality wasn't too great. Streets had curbs so that horse dung could be pushed to them and washed away when it rained. Not only were they were more polluted than they are now, they stunk more too. I guess when we devolve back to the 1850's there will be lots of folks happy. When are the Democrats going to start legislating tax credits for those wood- fired computers? And will each state get to legislate a maximum on horse hockey and how much methane each horse can crank out? Ah, I'm looking forward to a world where infant's lungs are protected from the infernal combustion engine and we go back to dying from carbon monoxide, worms, and tetanus.

January 26, 2009 at 3:41 pm

Andy M

Don't worry - the UAW will overlook this and still donate money to the next liberal Democrat candidate to come down the pike. Obama could say ANYTHING and it wouldn't make one bit of difference to them. The day that the UAW supports someone other than a liberal like Obama and his ilk is the same day there's a run on ice skates in h#$%

January 26, 2009 at 1:16 pm

Michael

Let's make this very simple, as a business owner when revenue is down and expenses are the same the best and fastest way to survive is cut employees to the point where even if it means you as the owner have to do two peoples jobs you are better off. GM and others are just doing what is needed in an economy destroyed by Arab Oil and Wall Street. Bush did not cause this and Obama can't fix it, after one week things are still getting worse. God Help Us All!

January 26, 2009 at 1:12 pm

publishable_Larry

from article: So let’s get this straight: in the same economic environment that forces GM and Chrysler to borrow taxpayer money merely to stay alive, they will also be forced to spend huge sums to develop new engine technology? ? Hey, that the auto industry has been in love with Bush's crippling of the EPA ? isn't anyones problem but GM and the future pulmonary health of the children of those who said to heck with clean air. GM was supposed to be doing this anyway. it's 2008 Who expects to be in business making cars that hurt peoples lungs ? and wallets ? GM was given the money to prevent a catastrophe regarding 2 million jobs lost. Don't forget that. It wasn't kept on life support to actually see if they could make a good car. I don't think anyone expects GM and GMAC to get their credit flowing again. GM is begging dealers to just put the risk on their heads. This new EPA law - if it goes retro ? you can now sue for yesterdays pollution ! yeah baby. if in 100 years you can't come up with an alternative to the internal combustion engine ? sheesh - I'd say someone wants petro to live on real bad.

January 26, 2009 at 12:52 pm

matt

When the automotive compaines get rid of (imprison) the criminals running them and their suppliers you will see a turnaround. The unions will have to be disbanded as well. Having spent 13 yrs in automtive manufacturing (in management/engineering) with a major supplier I know what I am talking about. The companies are ran by greedy cash drunk criminals and the unions are run by organized crime. Until both are run out the money sent to the automive companies is like stacking cord wood on a nuclear reactor. Watch it burn baby. There is a lot of wood being stacked/heaved onto a lot of companies. The taxpayers will end up freezing to death.

January 26, 2009 at 12:51 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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