GM closings: Washington had a role

Our view: GM’s downsizing represents a major loss for Maryland that could have been avoided

The decision by General Motors to cut nearly 15,000 jobs and close a handful of production facilities including the company’s transmission and electric motor production plant in White Marsh is an especially painful loss for Maryland. Not just because of the 300 jobs in White Marsh. Not just because it represents the end of a 70-year presence of GM manufacturing in the state. But also because government policy and tax dollars have played a substantial role in both the facility’s opening and now its closing.

GM exists today only because of a federal bailout authorized by Presidents George W. Bush and Barack Obama totaling in the tens of billions of dollars helped the company survive bankruptcy and get back on its feet financially a decade ago. Just last year, the underwriting continued with President Donald Trump’s tax cut that has so far this year yielded the company $157 million in benefits as of Sept. 30. And then there is the White Marsh facility itself — it was created less then two decades ago and updated just six years ago to help the company launch into the brave new world of electric vehicles. The electric motor production facility was made possible with a massive input from taxpayers — $105 million from the U.S. Department of Energy, $6 million from Baltimore County and $4.5 million from the state.

Those subsidies seemed like a good bet. GM had closed its much larger van production facility on Broening Highway in 2005. But electric vehicle motors looked like the wave of the future. In 2012, the price of a gallon of regular unleaded hovered around $3.60 — about $1 more than the current national average. The Obama administration had ratcheted up fuel efficiency standards. The United States was still a full participant in a global agreement to lower carbon emissions. The future looked green.

But what happened instead was that fuel prices went down, and American consumers regained their taste for sport utility vehicles and trucks, which now greatly outsell passenger vehicles. The federal government failed to do anything about that gas price decline despite operating a Highway Trust Fund deeply in the red, a product of a federal gas tax stuck at 1992 rates. Modern SUVs may not be the gas guzzlers of the past, but they aren’t EV’s either. And Americans are apparently willing to tolerate crumbling roads and bridges more than see prices at the pump return to 2012 levels. That’s a big reason why the company killed the Chevy Volt.

Meanwhile, Mr. Trump was elected and embraced cheap energy policies, turning away from EPA rules that sought to address climate change and even calling for a rollback in fuel efficiency standards. Mr. Trump’s tariffs on steel and aluminum as well as Chinese auto parts have also had a profound impact on car makers like GM. With new car prices rising, and public demand likely to be soft or decline, GM clearly had an impetus to cut costs. The result? It may still see a future in “next generation” electric and autonomous vehicles, but it doesn’t plan to spend the expected $4.5 billion in savings in legacy production facilities like White Marsh.

If anything, Maryland taxpayers didn’t get suckered so much as run over by events, some of which were driven by the market and some by government. That hurts. Maryland has lost a lot of manufacturing jobs over the past two decades. In recent years, the decline appeared to have reversed, but do the new jobs compensate for the old ones? As much as the Tradepoint Atlantic project has been a welcome sign of a jobs renaissance in Baltimore County (if a government-subsidized one), the primary employers so far at the former Sparrows Point steel mill have been warehouses and an auto import operation, not manufacturers.

As might be expected, various elected leaders are angry. Rep. C.A. Dutch Ruppersberger, who helped engineer the White Marsh plant’s opening as county executive, is mad. Gov. Larry Hogan vowed to forestall the closings, if possible. Incoming Baltimore County Executive John A. Olszewski Jr. called it “devastating.” President Trump angrily threatened to deny GM any outstanding government subsidies (which could prove tricky since the most glaring, the $7,500 electric plug-in tax credit, goes to the consumer, not the car maker). But beyond such wringing of hands and rending of garments, GM’s decision seems likely to stand, a product of circumstances in which not just some Detroit-based corporate executives but all Americans played a hand.

Become a subscriber today to support editorial writing like this. Start getting full access to our signature journalism for just 99 cents for the first four weeks.

Copyright © 2018, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad
28°