Confused about what's happening with the auto industry right now? Come sit by us.
I’ve been seeing a lot of news recently about the auto industry. What’s that all about?
A few things are going on. First, the North American International Auto Show is happening right now in Detroit, the celebrated event where auto manufacturers unveil their next big cars, trucks, sport utility vehicles and more. It’s the sort of thing that generates a ton of press, especially among car enthusiasts. Meanwhile, Tesla just started production at its Gigafactory in Nevada, which is a big deal in the world of electric cars and clean energy.
But the biggest news has been happening on the jobs front. Several major automakers in recent weeks have announced they are expanding production in the United States or moving jobs back from places like Mexico. Some guy on Twitter has been tweeting about it a lot; it might have popped up in your feed.
Which companies are bringing back jobs, and where are they going to be?
Several companies have made recent job announcements.
Fiat Chrysler said on Monday that it is spending $1 billion to modernize plants in Ohio and Michigan, which will create 2,000 new jobs. Last week, Ford canceled a $1.6 billion plant in Mexico and announced that instead it will spend $700 million to expand operations in Flat Rock, Michigan, where it will make electric versions of its vehicles, including its popular Mustang and F-150 lines.
Foreign-based companies are also getting in on the action. Toyota announced Monday it will invest $10 million in U.S. manufacturing over the next 10 years. Volvo on Sunday said it will open a plant in the U.S. that will make the next generation of its S60 mid-size sedans.
I noticed you mentioned Fiat Chrysler and Ford. What about General Motors (GM), the other member of the Big Three?
GM has had a busy week. It’s Chevrolet Bolt won North American Car of the Year at the auto show, which is a very big deal (and a threat to Tesla’s electric car plans, natch).
But President-elect Donald Trump also called the company out on Twitter for importing some of its Chevrolet Cruze cars from a plant in Mexico and threatened tariffs.
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!— Donald J. Trump (@realDonaldTrump) January 3, 2017
GM countered that of the 190,000 Chevy Cruzes sold in the U.S. last year, only 4,500 were Mexican-made — the vast majority were built in Ohio.
I’ve been seeing Trump tweet a lot about autos lately. What is that about?
Trump has made American manufacturing job creation a top priority. He is assembling a team to be tough on trade, for example. But he also knows that this is a big part of his public image, and people respond to things they know about and see in their daily lives. Autos make for a good example — cars and trucks are the types of things many Americans want to see Made in America.
Along with criticizing auto companies, Trump also has boasted about the job creation announcements, although some have argued it really doesn't have much to do with him.
Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning - much more to follow— Donald J. Trump (@realDonaldTrump) January 4, 2017
Are Trump's tweets working?
Well, GM CEO Mary Barra said that the company does not plan to change its manufacturing plans anytime soon, telling reporters: “This is a long-lead business with highly capital-intensive investments—decisions that were made two, three and four years ago.” (She also pointed out that the company has more than 40 manufacturing plants in the U.S. and has invested $11 billion here in the last two years alone.)
But there’s no doubt that automakers are feeling the impact of Trump’s tweets, especially when it comes to the threat of tariffs. The Detroit Free Press led with the headline today, “Donald Trump’s tweets shake auto industry.” Fiat Chrysler CEO Sergio Marchionne, meanwhile, said that the industry needs more clarity from the incoming administration to properly prepare for what’s ahead.
So what’s is going to happen next?
A lot of that depends on what Trump ultimately decides to do. Marchionne said Fiat Chrysler would close plants in Mexico if the North American Free Trade Agreement (NAFTA) ended, for example. But automakers — including the Big Three — don’t appear to want that to happen, since most of their business structure is situated around a big North American strategy rather than one solely based in the United States.
But automakers also are working hard to show the incoming administration that they are committed to American manufacturing. As the Wall Street Journal reported, car companies have “signaled they support seeing more Made in the U.S.A. labels in America’s driveways.”
Man, it sounds like automakers have taken a lot of heat lately. Has anybody come out in support?
Vice President Joe Biden toured the auto show on Tuesday, where he called Detroit “the single shining example” of America’s economic resilience, pointing to its recovery following the auto rescue in 2009. The auto rescue will be remembered as one of the Obama administration’s signature manufacturing achievements — we would be having a much different debate about American auto industry jobs right now if not for the rescue.