General Motors recently announced large-scale plant closures and layoffs, with top executives claiming the company needs $4.5 billion in savings to stay alive. This week the legendary Lordstown manufacturing plant in Ohio will close.
But GM has given over five times as much money — $25 billion — to Wall Street hedge funds and other investors in the past four years, including over $10 billion in controversial stock buybacks.
And GM recently authorized even more stock buybacks: it’s possible that every single dollar “saved” from job cuts and plant closures will go straight into the pockets of hedge fund billionaires and Wall Street.
In 2013, GM completed the taxpayer-funded bailout that kept the company alive and saved thousands of American jobs.
Billionaire hedge fund managers have been attacking the company ever since.
Hedge funds aren’t interested in American jobs, or in the communities that will be hit by plant closures and job loss.
Hedge funds are only interested in short-term payoffs for hedge funds and their billionaire managers — and they’ve relied on one-time dividends and share buybacks to get the cash they demand.
Stock buybacks used to be illegal, and the American economy was stronger and more fair when they were.
And hedge funds have become a destructive force in the American economy by exploiting regulatory loopholes that were meant to prevent the kind of predatory exploitation they’ve made into a profitable business model.
Workers, families, communities and elected officials can do something to fight back against the hedge fund attacks on GM and American jobs.
It’s time to make stock buybacks illegal again.
And it’s time to close the loopholes and put predatory hedge funds out of business once and for all.
Hedge funds are behind GM’s plant closures and job cuts
ust days after Thanksgiving of 2018, General Motors announced that it was closing five facilities, including the Lordstown assembly located just outside Youngstown, Ohio.
The announcement of the Lordstown closure was a devastating blow to the Youngstown area. The plant provided over 1,600 jobs and $250 million in total wages in 2017 alone.
The Lordstown plant had been in operation since the 1960s, and is one of the major employers in the Mahoning Valley.
Op-eds writers and talking heads were quick to point fingers at deindustrialization, offshoring, and the commercial failure of compact sedans.
Few pointed out the real culprits: activist hedge funds demanding that companies like GM turnover most of their profits to Wall Street in the form of dividends and stock buybacks.
GM’s decision to close Lordstown was the culmination of a four-year campaign by hedge fund managers to squeeze GM for every available dollar.
Hedge fund investors repeatedly mounted pressure campaigns to prevent GM from reinvesting their profits anywhere but back into their own share price. Through paid agents, harassing proxy measures, and public threats, the hedge funds extracted billions in buybacks.
And you don’t have to look back very far to see the impetus for GM’s decision — just one month earlier, the hedge funds made a big public push for one more payout.