The Detroit News reported Tuesday that General Motors — where Chair/CEO Mary Barra (pictured above) has staked the company’s future on replacing gasoline-fueled vehicles with electric ones — will move production of some of its traditionally-powered models from south of the border back to the United States:
General Motors Co. plans to invest $4 billion to move production from Mexico to three plants in the United States, including its shuttered Orion Assembly plant in suburban Detroit, three sources familiar with the situation told The Detroit News.
Full-size SUVs and light-duty pickups are coming to Orion, which was being retooled to build electric trucks before market demand waned. The gas-powered Equinox compact SUV is slated for Fairfax, Kansas. And the gas-powered Blazer, controversial when it was launched at a GM plant in Mexico, will be produced in Spring Hill, Tennessee, the sources confirmed.
Got that? Previously exported manufacturing of an American auto manufacturer’s products (and jobs) are coming back to the United States, with gasoline-powered vehicles prioritized over electric.
The move is partly driven by increased demand for high-profit SUVs and partly an effort to limit exposure to pricey import tariffs enacted by President Donald Trump. His goal: to force a manufacturing renaissance in the industrial heartland and beyond. When GM announced plans in 2022 to retool Orion for EV truck production, the state estimated the project would create 2,300 jobs and retain 1,000…
This is what happens when corporate executives allow politicians to take over their production decisions regardless of what consumers want. Now Barra and her lieutenants are forced to backpedal because there is little demand for GM’s EVs.
GM’s manufacturing reshoring is likely to be considered a major victory for Trump’s trade-and-tariffs policy — and could be a harbinger of additional moves by manufacturers foreign and domestic. The move likely ranks among the largest — if not the largest — reshoring of U.S. auto manufacturing since Trump took office for a second term…
Last month, GM announced an $888 million investment in V-8 propulsion engines at the company’s Tonawanda Propulsion plant near Buffalo, New York. At the time, CEO Mary Barra said the massive capital infusion shows “our commitment to strengthening American manufacturing and supporting jobs in the U.S.”
“V-8 propulsion engines” = “also not EVs.”
GM previously planned to retool Orion Assembly to make electric trucks beginning in mid-2026 after
General Motor’s Orion Assembly Plant/IMAGE: YouTube
repeatedly delaying production. Orion Assembly, which previously built the all-electric Chevrolet Bolt, was originally supposed to have EV truck production launch there in late 2024.
NLPC’s reporting on GM’s repeated futile forcing of EVs into the marketplace dates back well over a decade, when the failed Obama stimulus was the “Green New Deal” of the era from which the company extracted significant subsidies backed by U.S. taxpayers for the production of the Chevy Volt. Barra has been Chair/CEO since 2014, but she’s a GM careerist, previously holding top executive positions in product development and supply chain.
Therefore, she should know better, but her tenure in the top spot has been marked by her continued flailing about trying to appease whoever’s in the White House, vacuuming up tax and incentive favorability, even when it means investing billions of dollars of company assets in cars that no one will buy — for over 15 years. This is called “not learning from your mistakes,” yet somehow Barra still has her job. She has also been on the board of directors at woke Disney since 2017, so maybe that explains some things.
Last year at GM’s annual meeting NLPC sponsored a shareholder proposal that requested the company eliminate all incentives for top corporate executives (including Barra) tied to the production of EVs. While the company’s investors didn’t support the measure, they still registered their dissatisfaction with the direction of management in the meeting’s “Say on (Executive) Pay” vote. The company recounted in this year’s proxy statement:
The Board was disappointed with the outcome of our Say-on-Pay vote of approximately 58% at our 2024 Annual Meeting, which was significantly lower than our historically strong support…
At the end of 2023 when the [Board of Directors’] Compensation Committee was evaluating metrics for our 2024 compensation programs, the Committee determined that it would be appropriate to include an EV-related goal in our [short-term incentive plan] STIP, and to no longer include an EV-related goal in future [long-term incentive plan] LTIP awards, to better reflect the pace of our transformation strategy and market dynamics. In determining the objective of this metric, the Committee considered a range of factors including overall progress against key aspects of our EV strategy, and status of our work to scale production and drive sales and profitability. The Committee also reviewed current and anticipated future demand for EVs based both on internal forecasting as well as recognized external benchmarks, which indicated sustained growth in demand for EVs over the coming year. In the context of these factors, and especially considering the magnitude of effort required to scale production of this new class of vehicles, the Committee initially determined that it was most critical to focus leadership on scaling EV production to meet anticipated demand, and accordingly selected Global EV Volume as the EV metric for our 2024 STIP.
However, it became clear in reviewing demand forecasts and other key market trends in the first half of the year that growth in demand for EVs had slowed and was less than expected at the outset of the year. At the same time, the Company was successfully demonstrating that it could rapidly scale EV production volume. Further, during this time, investors were encouraging the Company to prioritize profitability over production volume. The Committee determined that EV volume was therefore no longer an appropriate objective to incentivize, as over-production in the face of lowered demand would likely result in excess inventory and could harm profitability and other important objectives. As a result, the Committee made a deliberate and strategic decision during Q2 to replace the EV volume metric with a Q4 EV Variable Profit (VP) Margin metric. At the time the Committee made the decision, the Company was on track to achieve above target EV volume, given the significant efforts of our team to build production capacity and enhance efficiency. However, continuing on that path would have been value-destructive for our Company and dealers, and replacing the metric both mitigated the potential perverse incentive of driving further production against lowered demand, while also aligning with our external commitment to be variable profit positive by the fourth quarter of 2024 and drive sustainable earnings.
In case you had trouble wading through that, the bottom line is:
- The Compensation Committee could no longer make the case to shareholders that EVs had a long-term future, so it switched executives’ incentives for EVs to a short-term incentive.
- GM had already already invested billions of dollars on EV production so they just couldn’t bail on it.
- They still got it wrong, belatedly realizing in 2024 that even though they needed to scale back expectations, they didn’t realize EV demand would suck so badly.
- Shareholders demanded profitability related to EVs, not volume (as any top executive and director of a major corporation should already understand).
- Overproduction of EVs was killing the company.
- Dealers were getting ticked off.
- They couldn’t continue with the “perverse incentive” to bankrupt GM with EVs.
To save face, the Board’s Compensation Committee came up with a phony-baloney “variable profit margin” incentive for Barra and her lieutenants that was grounded in the 4th quarter of the fiscal year only. This extremely limited metric is defined by GM as this:
This measure is defined as Consolidated operating income related to the sale of EVs plus (i) the value of emissions credits generated by the production of EVs, (ii) less EV fixed costs and (iii) adjusted for costs incurred not directly attributable to vehicles wholesaled during the period.
So in order to conjure up some kind of reward to Barra and Co. for their deeply failed EV strategy, GM’s board had to count 1. Emissions “credits” generated mostly from California’s idiotic laws 2. don’t include fixed costs related to EVs. 3. whatever.
So NLPC’s proposal to eliminate EV incentives from executive pay last year failed, but no one is happy with the results. GM’s board of directors was forced to back away from the destructive strategy. Now Barra is bringing jobs back to the U.S., to make gasoline vehicles, because it’s probably the only way to save her job. It won’t be long before these pay incentives disappear.
This is what happens when political chameleons run companies instead of strong leaders. Doesn’t this report look ridiculous now?
