Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.
1st Gear: Workers Take The Hit As Small Car Sales Tank
General Motors confirmed that amid declining sales for small cars as buyers switch to trucks and SUVs that it will lay off 2,000 workers at plants at Lansing, Michigan and Lordstown, Ohio where it builds the Chevrolet Camaro and Cruze, respectively.
Consumers in the U.S. have been buying more sport utility vehicles, shunning small cars like the Cruze. Sales of the car fell 20 percent this year through October as the Detroit-based automaker has sold fewer to rental fleets. Camaro sales fell 9 percent as sports cars have become less popular. The Lansing plant that builds the Camaro also makes the Cadillac ATS and CTS sedans, but those assembly lines will be minimally affected.
GM is also investing $900 million in three plants including the Lansing one, but those won’t add any new jobs, a spokesman told the newswire. Even if the auto industry is doing well and posting record profits, clearly a lot of workers aren’t feeling it.
2nd Gear: Big Changes For Unions Too
It’s not just the election of President Trump; Republicans have the U.S. House and Senate too, and for labor unions in the automotive and other industries, that means things could get tougher. Via Reuters:
“We don’t have a firewall now,” said Tom Buffenbarger, a prior president of the International Association of Machinists and Aerospace Workers who campaigned for Clinton.
Trump has expressed support for so-called right-to-work legislation, which allows workers to avoid paying union dues. Republican leaders in Congress have consistently sought such a change at the national level. Labor unions say such laws are aimed at undermining collective bargaining and workers’ rights.
William Gould, chair of the NLRB under Democratic President Bill Clinton and now a professor at Stanford Law School, said on Wednesday that Trump was likely to partner with Congress in dismantling a host of administration labor initiatives from Obama.
Republicans “regard unions as first amongst fair game” because of their support for Clinton, he said.
3rd Gear: Jobs May Not Come Back, At Least Not Yet
One more election-related gear, for now: Trump’s talk of bringing production back to the U.S. from other countries, specifically, and dismantling NAFTA may be far, far harder to execute than people think. Shocker! Via The Detroit News:
Kristin Dziczek, director of the Industry & Labor Group at CAR, said even if Trump delivers on some of his campaign promises, the automakers aren’t just simply going to shutter operations in Mexico and move them to the United States.
“You can put up trade barriers, you can dismantle NAFTA, and it’s like whack-a-mole because these are global industries, global supply chains and global companies,” she said. “And you know, they’ll find another place for that part or supply or vehicle to come from. It’s not just Mexico.”
Carla A. Hills, chairwoman and CEO of Hills & Co. International Consultants in Washington, D.C., which advises companies on trade issues, said tariffs on products from Mexico would be particularly tough on U.S. automakers.
Hills, who was a U.S. trade representative under the first Bush administration, said the U.S. sells more goods to Mexico than many other countries combined. She believes many companies will turn to the Congress and others for assistance in persuading Trump not to do “something foolish that really hurts our industry.”
“To try to destroy that market that we’ve worked so hard to open up would be a disaster,” she added.
4th Gear: Renault Faces Criminal Probe In France Over Diesels
The vast majority of attention toward emissions cheating has been directed at Volkswagen, because clearly its diesel-greasing was the most widespread. But that doesn’t mean VW was alone. The other automakers suspected of circumventing emissions laws are Opel (GM’s European subsidiary) and Renault, and now the latter faces a criminal investigation in France. Via Reuters:
Renault faces a criminal probe in France after the country’s consumer fraud agency passed a file to prosecutors detailing suspicions its engines had broken emissions laws, the government said, sending the carmaker’s shares lower on Thursday.
The industry ministry said late on Wednesday the DGCCRF consumer fraud agency had sent prosecutors the findings of its inquiry into possible emissions test manipulations by Renault, opened in the wake of Volkswagen’s diesel emissions scandal.
“It is now up to the courts to determine what further action to take over the suspected breaches,” the government said in a statement. Officials at the prosecutor’s office in Nanterre, west of Paris, were not available for comment.
5th Gear: Jia Yueting May Have Overshot Things
You’ve probably read by now about Jia Yueting, the “Chinese Netflix” billionaire attempting to finance startup automaker Faraday Future, a car branded by his own company LeEco, and about a billion other projects. All of which are running low on cash.
Here’s another venture not doing well: he’s attempting to beat ride-hailing service Didi Chuxing in China, which, as my colleague Raphael Orlove put it, is like Elon Musk vowing to kill Uber and Lyft. Via Bloomberg:
Jia made a fortune from his Netflix-like video business and used the profits to move into a dizzying array of businesses, including smartphones, TVs and electric vehicles. But his effort to take on Uber-killer Didi Chuxing in car-hailing may have hit a serious roadblock.
Yidao Yongche, the limo service 70-percent owned by LeEco, has been trying for months to hit its fund-raising targets and fallen short, according to Technology Vice President Zhang Fan. The distant runner-up to Didi has been unable to close the round amid shifting local regulations and intense competition. Yidao’s aiming for up to 8 billion yuan ($1.2 billion), according to people familiar with the process.
The startup’s struggle to secure cash underscores the upheaval gripping LeEco, the holding company for a coterie of enterprises from online streaming to cars and phones. In a memo to employees this week, Jia admitted his ambitions had run ahead of reality, and LeEco faced a cash crunch after years of breakneck expansion without adequate capital-raising.
Reverse: Those Are Useful
Neutral: Why Don’t Blue Collar Workers Feel The Recovery?
Is it poor messaging that doesn’t articulate the health of the American auto industry, or is it just everyone else ignoring a grim reality for many people in the Rust Belt?