WASHINGTON — Donald Trump’s tariff battles with Canada, Mexico, China and Europe have inflated the cost of steel, making it more expensive to build cars in North America, but General Motors’ decision to close factories and lay off thousands of people is more about tactics than the balance sheet, say trade observers and automotive industry experts.
“It’s very understandable, given all the hype associated with the trade agreement, and, you might say, the troubled relationship between your prime minister and our president, that it’s some sort of reaction to the tariffs on steel and aluminum,” said Michigan business professor Marick Masters. “But I think it’s more of a strategic adjustment by General Motors to prepare itself for a future in which it’s trying to get ahead of the technology curve.”
The company is placing a substantial bet on a future dominated by three high-tech trends that have been upending the world of the internal-combustion engine: electric vehicles, mobility services like ride-hailing apps, and cars and trucks that are capable of driving themselves.
And they’re doing it at a time of relative economic health, a departure from the traditional peak-and-trough timelines that tend to predict waves of deep, widespread job cuts, said Maryann Keller, a New York-based automotive-industry consultant.
As unmistakable as the coming future is, it’s still a relatively long way off for an industry that still manages to sell more than 19 million vehicles in North America each year.
“It’s unusual for a company in this kind of market to make announcements where they are essentially shedding capacity. I think that is a pretty profound statement from GM that they choose to do it at this time,” Keller said. “If they’re in a race, General Motors is running way ahead of the pack. They may run way ahead of the pack and run off a cliff, because nobody can see the future that clearly, but they have defined it and they are preparing for it.”
When news emerged late Sunday that the company was planning to shut down its flagship Canadian plant in Oshawa, Ont., putting more than 2,500 people out of work, social media set its sights on Trump’s “America First” strategy for bringing manufacturing jobs back to U.S. soil.
But that argument all but evaporated Monday when the company announced that as part of its plan to save US$6 billion by the year 2020, it was also shutting down production at four other U.S. plants — several of them deep in Rust Belt states that helped elevate Trump to the presidency in 2016.
“The U.S. got hit harder than we did,” said one Canadian government insider. “This is about a global restructuring in the industry towards electric and (artificial intelligence)-driven autonomous vehicles.”
Nor is the restructuring aimed exclusively at blue-collar workers. GM is also slashing salaried and salaried contract staff by 15 per cent, which includes a quarter of its executives. The US$6 billion in savings includes operating-cost reductions of US$4.5 billion and lower capital spending of almost US$1.5 billion a year.
That didn’t seem to placate Trump, who famously promised Ohio supporters their jobs were “all coming back” during a 2017 rally not far from GM’s Lordstown facility, where production will grind to a halt in the spring.
Trump described being “very tough” in his conversation with General Motors CEO Mary Barra.
“I said, ‘You know, this country has done a lot for General Motors. You better get back in there soon. That’s Ohio,’ ” he said Monday. “I have no doubt that in a not-too-distant future, they’ll put something else. They better put something else in.”
Whatever that “something else” turns out to be, it’s a safe bet it won’t run on fossil fuels — a leap of faith that Keller described as a bold venture into unknown territory.
“I really do believe that this is a company that is identifying for itself a very different business model. This is their statement about the future — it may be completely wrong, but I don’t think that politics has much to do with it,” she said. “There is fear, frankly, in terms of what this revolution means for traditional auto companies. I’m not about to hang crepe and say it’s going away. It’s not going away.”
James McCarten, The Canadian Press
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Insurance rate increases absolutely unacceptable: NDP Critic for Service Alberta
This post was submitted by Jon Carson, NDP MLA for Edmonton-West Henday, Opposition Critic for Service Alberta
Thirty per cent.
That’s how much auto insurance rates skyrocketed by for some Albertans at the end of this year, after Premier Jason Kenney and the UCP removed the five per cent cap on rate increases that our NDP government brought in, taking a “no limit” approach to how much insurance companies could actually raise rates.
The jump was immediate.
Albertans saw a wave of premium increases bordering on price gouging. Over 90% of car insurance companies filed for rate increases as soon as the cap was lifted, and rushed to bill drivers as soon as they could. Of the companies that received approved rate changes, the increases ranged from 4.9 per cent to an eye-popping 29.8 per cent.
It was a nice gift from Jason Kenney, who already slammed families for hundreds of dollars of new costs in his fall budget, including hikes to income tax, property tax, as well as more in school fees, prescription drugs and college tuition.
As usual, Finance Minister Travis Toews trotted out the UCP’s one-trick pony and blamed the NDP, claiming that insurance companies were set to pack their bags and flee the province if he didn’t let them jack up premiums beyond five per cent.
The lobbying effort came out in full force. The brokers, the insurance companies, and the Insurance Bureau of Canada are working overtime to sell quite the sob story: a massive spike in claims costs, not enough options for drivers, etc, etc. It’s tough times for the poor, little ol’ car insurance company.
What a load. These are some of the biggest and most profitable companies in Canada, and they simply want back the power they had to jack up premiums hand over fist.
The truth is that claims costs over the past few years are level, a fact that’s supported by the Insurance Bureau of Canada‘s own data. In fact, an actuarial analysis by Fair Alberta Injury Regulators, an organization made up of concerned Albertans, doctors and legal experts, found that injury payouts have stabilized in the last few years, and even started to dip in 2019. Their actuary specifically found evidence that claims are “not skyrocketing.”
This is further supported by the Alberta Superintendent of Insurance, responsible for all regulatory oversight of insurers operating in Alberta with a specific duty to ensure that insurance companies treat Albertans fairly. In his annual report for 2018, he found on average that the claims ratio for car insurance was 80 per cent across all companies in Alberta. Not the 120 per cent figure the insurance companies trot out on TV.
And while the UCP Government continues to claim they have documents to prove the cap made the car insurance industry unsustainable, they haven’t provided a single piece of paper showing any of these companies would bail if they could–GASP–only raise premiums five per cent every year.
So why remove the cap? Well, in politics, it’s who you know. And Jason Kenney knows an awful lot of people in the insurance industry. Namely, his former chief of staff and campaign director Nick Koolsbergen, who was hired to lobby the Premier on behalf of the car insurance industry just last year. He has Kenney’s cell phone number.
Sounds like a good guy to have on your side… if you’re a car insurance company.
The fact is, these companies turn a profit of tens of millions of dollars each year. They’re used to having carte blanche in Alberta, and they want it back.
Under the thinly-veiled guise of “red tape reduction”, the UCP has struck a panel looking at more regulatory changes that the insurance lobby itself has said “could also change the rate regulation framework that governs how insurers set premiums.”
If costs are going to go up even more, who will Jason Kenney look out for? His friends and interests in big insurance? Or everyday Albertans driving to work?
Knowing Jason Kenney, Albertans should brace for impact.
Jon Carson is the MLA for Edmonton-West Henday and the Alberta NDP Opposition Critic for Service Alberta.
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