Though General Motors’ prioritization of profitability measures – including the idling of GM Lordstown – allowed for stronger 2018 financials, local officials said their priority is stability in the Mahoning Valley.
GM posted an $8.1 billion net profit for 2018, fueled by better prices for vehicles sold in the U.S., its most lucrative market.
It’s a strong rebound from the previous year when the company lost $3.9 billion on a giant tax accounting charge.
GM made $10.8 billion before taxes in North America, down about 9 percent from 2017. But it still means big profit-sharing checks for about 46,500 union workers in the U.S. They’ll get $10,750 each, less than last year’s $11,500.
The company plans to close five U.S. and Canadian factories, including the Lordstown Assembly Plant, and eliminate a total of 14,000 salaried and blue-collar jobs as part of a giant restructuring to boost profit margins, prepare for a downturn and invest more in electric and autonomous vehicles.
The GM Lordstown plant is due for idling in March, and there’s been no promise the plant will reopen with a new product. Closure would mean the end of about 1,600 jobs. Thousands more lost their jobs when the plant eliminated its third and second shifts in recent years.
But GM says there are 2,700 openings for U.S. workers at factories across the nation.
“I know it’s hard for the employees, but the plant has not been operating at full capacity. It was not particularly in favor with consumers because they’re shifting to sport utility vehicles,” said Michele Krebs, a Detroit-based executive analyst for Autotrader.com, adding GM’s departure from the European market boosted 2018 financials.
“GM has shifted its focus not on sales and market share as much as profitability. As demonstrated by what they did in Europe, down to the Lordstown plant, they are very willing to cut operations that don’t lead to good profitability,” Krebs said.
Lordstown Mayor Arno Hill said Wednesday he’s not concerned with GM’s earnings and is awaiting the outcome of negotiations between GM and local union workers, which could signal new life for the 53-year-old Lordstown facility.
“I don’t care how much product they make as long as we get a car in our plant,” he said. “They made a business decision I’m not happy about; the whole Valley’s not happy about.
“They still haven’t said they’re shuttering [the Lordstown plant]. I’m still holding out we will get a product. Whether that’s false hope, I can’t say for sure.”
Dave Green, president of United Auto Workers Local 1112 and co-chairman of the Drive It Home Ohio campaign, said Wednesday he had not reviewed the report, as he and other union workers were traveling home from Washington, D.C., where they attended President Donald Trump’s State of the Union address Tuesday.
“We remain hopeful that General Motors will recognize we have the hardest-working, most dedicated people in the world right here in the Mahoning Valley, and that we have been part of the GM family for 53 years, and you don’t turn your back on family,” he said in a Tuesday media release.
James Dignan, president and CEO of the Youngstown/Warren Regional Chamber and co-chairman of the Drive It Home Ohio campaign, said GM’s profitability moves, including the Lordstown idling, are “directly attributable” to their efforts to free up capital.
“That cash is ostensibly being freed up for further investment,” he said Wednesday. “It begs the question of, ‘Where is that investment going?’
“An opportunity to free up cash – is it due to some other demand? Hard to say. ... Our hope is that here in the Mahoning Valley, freeing up that cash is going to drive further investment, and we’re hopeful that further investment comes back to the Mahoning Valley and the Lordstown facility.”
GM also wanted to cut 8,000 white-collar workers. About 2,200 took retirement offers, and the company let go of an additional 1,500. This week, GM started telling 4,300 other salaried workers that they were out of a job.
“Instead of padding shareholders’ bottom lines and building new plants in Mexico, GM should be using corporate profits and the tax windfall gifted to them by President [Donald] Trump to retool the Lordstown complex in the Valley,” said U.S. Sen. Sherrod Brown, a Cleveland Democrat. “These Ohio workers have helped create GM’s financial success, and GM should treat these workers with the dignity they’ve earned by investing in Lordstown and bringing a new product to the plant.”
U.S. Sen. Rob Portman, a Cincinnati-area Republican, said: “The workers of the Mahoning Valley have invested in and sacrificed for GM and its success. I’ll continue to push for GM to do right by their workers and bring a new vehicle to Lordstown.”
The company said Wednesday it made $5.58 per share for the year. Without $2.5 billion worth of special items largely due to restructuring, the profit was $6.54, easily beating Wall Street expectations of $6.29, according to a survey by FactSet.
Full-year revenue rose 1 percent to $147.05 billion, also beating estimates of just over $145 billion.
GM made $2 billion, or $1.40 per share, in the fourth quarter. Excluding restructuring charges, the company’s per-share earnings were $1.43, also breezing past Wall Street expectations of $1.24.
Shares of GM rose 1.4 percent.