Say what you want about President Trump’s public disparagement of Ukrainian President Volodymyr Zelenskyy, but Trump is transparent about how he regards foreign leaders who disrespect him. President Biden had nothing but disdain for Israel’s Benjamin Netanyahu, but he was more circumspect in public about his feelings. According to Bob Woodward, Biden in private referred to Netanyahu as a “son of a bitch,” a “bad guy… a bad f—ing guy.”
Perhaps international diplomacy requires that leaders remain more circumspect about their true feelings, but circumspection has never been one of Trump’s strong suits, and most Americans knew that when they voted to elect him. The country is divided about Trump’s treatment of Zelenskyy, and I’ll let Democrats and the corporate media duke it out with Trump supporters about whether the president’s behavior was appropriate.
What’s undeniable is that anyone who embarrasses Trump, particularly while visiting the White House, can expect the president will go nuclear without launching any missiles. In public, one must display considerable deference to Trump and his agenda, particularly his professed promise to make America great again, or face the consequences. Zelenskyy is badly in need of a mentor, and if he hopes to learn how best to deal and engage with Trump, he should plead with GM CEO Mary Barra to mentor him.
Marionette skills
Barra knows how to play Trump, and I have a grudging admiration for her marionette operating skills. Although Barra has been steadily moving jobs and manufacturing to Mexico where GM under her leadership has become that country’s biggest automaker, when Trump was elected Barra feigned support for his MAGA cause.
Barra unabashedly proclaimed that she was aligned with Trump’s goal to boosting American manufacturing, despite warning that the president’s proposed 25 percent tariffs on vehicles she assembles in Mexico and Canada “could have a very substantial (negative) impact” on GM’s operations.
“I’m actually looking forward to working with the president and with the administration, because I think we can grow the importance of the auto industry and manufacturing, and so I think there’s a lot that we have in common,” Barra said.
Unlike Zelenskyy, Barra made a public display of her supposed support of Trump and celebration of his election, donating $1 million to his inauguration festivities and supplying vehicles to transport V.I.P.’s who were attending the coronation.
Whopping dividend increase
Actions speak louder than words, and Barra in recent days made clear that she either doesn’t think Trump will follow through on his threatened tariffs or they aren’t really that big a deal. In addition to increasing GM’s dividend payouts to investors by a whopping 25 percent, Barra also earmarked another $6 billion to buy back an estimated four percent of GM’s outstanding shares.
The buyback is in addition to the $16 billion Barra previously earmarked to buy back more than 20% percent of GM’s outstanding shares.
When companies increase their dividends, it signals their managements see the future as rosy as Starkman Approved views the world. Barra’s $6 billion stock buyback is pretty much a giant FU to Trump.
Stock buybacks are the antithesis of making America great again. They were once illegal, and they still should be because it allows CEOs to enrich themselves by artificially increasing the value of their company’s shares, which comprises a substantial amount of their personal net worths.
Stock buybacks reduce the number of shares outstanding, thereby making each share worth more. Imagine a pie valued at $12 that’s cut into four slices and valued at $3 a slice. Simply put, a stock buyback is essentially a re-slicing of the $12 pie into three pieces, making each slice worth $4, but there is no material increase in the quality of the actual pie.
With fewer slices outstanding, the pie often becomes more valuable than $12 because there’s less availability for sweet tooth lovers to feast on. Throw in some rebate coupons, or dividends as Wall Street calls them, and the pie becomes even more desirable.
Rancid pies
GM under Barra is best likened to a baker of increasingly rancid pies, subject to recalls for problem engines, faulty transmissions, and software issues. Barra’s grandiose vision to displace Tesla as America’s No. 1 seller of electric vehicles was akin to promising GM would become a leading purveyor of healthy organic pies, but the company earns most of its profits selling the equivalent of pies made with processed white flour, high fructose sugar, and oodles of artificial ingredients.
Understandably, many of those who understand GM’s leadership-challenged management and its products increasingly have taken a dim view of the company and its prospects. Prior to Barra’s latest stock price hocus pocus, Bloomberg reported more than 9% of analysts covering GM had a sell rating on the stock, the largest share since 2015, one year after Barra was named CEO.
Now you understand why Barra was looking to bribe investors with a huge dividend increase and a costly stock buyback, rather than invest in advanced technology like artificial intelligence and retaining experienced employees, not unceremoniously throwing them under the bus. Prescient Wall Street minds like Cathie Wood never believed that Barra could accomplish anything more than selling gas guzzling trucks and SUVs.
Unlike China, which demands that its domestic automakers maintain high quality standards (the country’s communist government once forced Tesla to publicly apologize for its previously shoddy manufacturing and its arrogance dealing with customer complaints), President Trump isn’t bothered by the quality issues of GM’s vehicles. Trump only insists that GM manufacture its problem-plagued vehicles in the U.S.
Given that GM was rescued by U.S. taxpayers and mooched more than $7.5 billion from them, that’s a very reasonable demand, particularly since Trump will uphold Biden’s 100% tariffs on China’s most technologically advanced and better-made electric vehicles, even if they are manufactured in Mexico. Ford CEO Jim Farley is among those most gaga about China’s EVs, which without tariffs would likely cost less than any EV Ford or GM makes and most of their other vehicles.
By my back-of-the-envelope calculations, Barra could easily repatriate her Mexican operations for a lot less than the $22 billion she’s earmarked for stock buybacks. Barra told Wall Street that some of GM’s factories have excess capacity.
Barra’s pal Joe
Just months after Barra’s good friend Joe Biden was elected president, GM announced that it would spend $1 billion to electrify one of its plants in Mexico, a move that outraged UAW leaders.
“At a time when General Motors is asking for a significant investment by the U.S. government in subsidizing electric vehicles, this is a slap in the face for not only UAW members and their families but also for U.S. taxpayers and the American workforce,” said Terry Dittes, UAW’s former vice president and director of the General Motors Department.
GM builds its affordable EV Chevy Equinox, Blazer, and Cadillac Optiq vehicles in Mexico. Former Energy Secretary Jennifer Granholm just prior to the presidential election donated $500 million in taxpayer monies to GM so the company could retool at aging Michigan factory in Lansing. The giveaway was made with the proviso that GM spend at least that much on the factory retooling, suggesting the entire retooling cost was only $1 billion.
Seems to me that it would cost GM considerably less than what it earmarked on stock buybacks to move its Mexico operations back to the U.S. At the end of 2023, GM had 25,000 direct employees in Mexico, so we are talking a lot of jobs.
Eat the rich?
UAW’s Shawn Fain’s deafening silence about Barra’s stock buybacks is noteworthy. Remember Fain, the clown who donned “Eat the Rich” t-shirts during contract talks? Barra has repeatedly played Fain for the fool that he is.
Barra allowed Fain to declare “a historic victory” when she agreed to significantly raise the wages of UAW factory workers, but later told analysts the increases were no big deal. In fact, GM’s increased labor costs under the four-and-a-half-year UAW contract were only $9.3 billion – less than half what Barra subsequently earmarked for stock buybacks.
“The entire contract was $9.5 billion in all-in costs over the next five years for workers, and in a single day they handed themselves $10 billion,” Tony, a veteran GM worker at GM’s Spring Hill, Tennessee, assembly plant told the World Socialist Website more than a year ago. “They had two stock buybacks this year, and they’ll probably have one or two more next year. Barra and the other execs are retiring soon, and they want to drive up the share value so they can cash out and retire.”
The stock buybacks have considerably enriched Barra. After GM’s stock rose because of the price manipulation, Barra sold a big chunk of the stock holdings she received as compensation, netting her more than $80 million in cash profits.
Not a peep from Fain on Barra’s stock sales. Poor guy, he squandered millions of his union members’ dues to support Kamala Harris, despite Trump campaigning to boost American manufacturing jobs. Fain no doubt was counting on some plum Washington job if Harris were elected. I’d be surprised if UAW members vote to re-elect him.
I’m also doubtful that Trump will ultimately impose his 25% tariffs on Mexican made vehicles. Instead, he will come up with some face-saving solution that he will declare a major victory but in fact won’t impact GM all that much. Trump regards that stock market as a key benchmark, and he won’t risk causing great harm to GM’s or Ford’s share prices.
As has been the case for her more than 10 years at the helm of GM, Barra will have the last laugh – all the way to the bank.