Job Losses and Layoffs Plague General Motors, Stellantis, and Ford
The Big Three automakers, General Motors, Stellantis, and Ford, are already experiencing financial troubles despite recently signing generous union contracts. General Motors and Stellantis have recently announced layoffs, while Ford has scaled back hiring plans for a forthcoming battery factory. These job losses may lead to politicians offering financial aid to the companies, but taxpayers should be aware that job losses are likely to continue regardless of promises made by the companies and politicians.
Taxpayer Subsidies for the Big Three Are All But Guaranteed
Taxpayer subsidies for the Big Three automakers are almost certain. In August, the Biden administration announced $15.5 billion in funding and loans to assist car manufacturers in redesigning their factories for electric vehicle production. These giveaways are said to “expand and retain high-paying auto manufacturing jobs,” with the Big Three likely receiving the majority of the funds. However, past experiences show that layoffs still occur even after the companies receive the money.
Examples of Layoffs Despite Taxpayer Cash
General Motors announced that more than 1,300 Michigan factory workers would be let go in January, mainly at GM’s Orion Assembly plant. This announcement came after a decision to delay production of two electric pickup trucks. However, in January 2022, Michigan Gov. Gretchen Whitmer announced a $120 million “investment” in GM’s Orion operations, claiming it would create and retain thousands of jobs. Regardless of the job losses, the company will still receive the taxpayer money.
Similar circumstances can be seen at Ford’s BlueOval Battery Park. Ford initially promised to create 2,500 jobs but later stated they would create 1,700 jobs, 800 fewer than promised. Despite this, Ford will still receive taxpayer support. Stellantis also announced potential layoffs at its Detroit Mack plant, yet taxpayer dollars will continue to flow into the company.
Corporate Handouts and Short-Term Political Gain
Whether it’s the Big Three or any other corporate recipient of state funding, companies tend to benefit from subsidies regardless of later layoffs. There is rarely a demand for the money to be returned. Michigan officials have shown a willingness to overlook unfulfilled job creation promises and have decreased transparency regarding cash allocations. This raises concerns about how public money is spent and whether private companies should have access to it without public accountability.
The deeper issue lies in the fact that taxpayer subsidies prioritize short-term political gain rather than long-term economic growth. Research has consistently shown that these subsidies harm growth and often fail to deliver the promised job creation. Yet politicians continue to announce new giveaways, knowing that job creation announcements generate more attention than subsequent retractions.
The Need for Real Reform
Governor Whitmer has allocated $6.3 billion in taxpayer funding for private companies, including automakers, during her time in office. However, Michigan has 12,000 fewer automaking jobs than when she first took office. The downsizing of the Big Three will likely result in increased taxpayer support. It is crucial to implement real reform that makes automakers more competitive, productive, and responsive to customer demands. No amount of taxpayer funding can achieve this.
Each new taxpayer subsidy, incentive, and loan, whether from Lansing or Washington, will be celebrated for its job creation potential. However, these promises should not be believed. While they may help politicians secure their positions, they will not save jobs in Detroit. The only solution lies in genuine reform that addresses the underlying issues faced by automakers.