Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Trump Puts Auto Makers, Trade Policy in Spotlight

Posted by hkarner - 5. Januar 2017

Date: 04-01-2017
Source: The Wall Street Journal

GM says only a ‘small number’ of Chevy Cruzes are sent to U.S. from Mexican plant

Ford Motor Co. on Tuesday scrapped a plan to build a $1.6 billion small-car factory in Mexico that Donald Trump had slammed, a move announced just hours after the president-elect knocked General Motors Co. on Twitter for importing compact cars from Mexico to sell in the U.S.

The developments escalate the tension over trade policy between Mr. Trump and U.S. corporations. Analysts say the auto industry has the most at stake over Mr. Trump’s vow to renegotiate the North American Free Trade Agreement, which has allowed car makers and suppliers to move production to Mexico in recent years without facing tariffs.

Shortly after his election, Mr. Trump took credit for saving jobs at an Indiana factory that air conditioning maker Carrier Corp. had planned to move to Mexico.

While Mr. Trump has won concessions from individual companies—resulting in limited job retention and perhaps scoring political points—he would have to enact a broader policy on trade or offshoring to prevent major shifts in employment across borders, trade experts say. And such measures could hurt other parts of the U.S. economy.

House Republicans have developed a border tax proposal to disadvantage imports, and Mr. Trump has proposed a tax or tariff of 35% on goods made by companies that shift production abroad, without providing details.

southern-flowMajor U.S. manufacturers are updating contingency plans for a host of corporate strategies—from factory relocation to tax planning—that could be affected by policies Mr. Trump has said he wants to see enacted, said Steven Winoker, an industrial sector analyst with Bernstein Research.

In the process, executives are trying to keep a low profile and learn from the experience of companies with which Mr. Trump has tangled, including Carrier parent United Technologies Corp. and Ford. “They don’t want to be managed by tweet,” Mr. Winoker said.

Many economists say the U.S. has already experienced the bulk of job outflows from opening up trade with Mexico and China.

The Peterson Institute for International Economics estimates that while imports from Mexico have displaced 203,000 U.S. jobs annually in recent years, the two-way trade has also created 188,000 U.S. jobs due to exports headed south—so the net U.S. loss is 15,000 jobs annually.

Mr. Trump on Tuesday said he chose Robert Lighthizer as his nominee to be the nation’s chief trade negotiator, a lawyer who has spent three decades pressing for punitive tariffs on overseas competitors of U.S. businesses.

“I am fully committed to President-elect Trump’s mission to level the playing field for American workers and forge better trade policies which will benefit all Americans,” Mr. Lighthizer said in a statement from Mr. Trump’s team.

Ford executives on Tuesday attributed their move to cancel the Mexico factory to slumping demand for compact cars as well as optimism over the president-elect’s “pro-growth” strategies.

Ford had said it would move production of its Focus small car in 2018 from Michigan to a factory being built in San Luis Potosí, Mexico, a move Mr. Trump had said could lead to 35% tariffs totaling more than $1 billion annually against the company. Ford instead said it would move that car’s assembly to a plant it owns in Hermosillo, Mexico.

The Dearborn, Mich., auto maker said it would divert $700 million of the now-scuttled investment to a factory in Michigan slated to build electric vehicles. The move is expected to result in 700 new jobs located south of Detroit.

Mr. Trump earlier took to Twitter to knock GM for importing some of its Cruze compact cars from a plant in Mexico for sale in the U.S. “Make in U.S.A. or pay big border tax!” the Republican tweeted, marking his most direct attack yet on Ford’s chief rival.

Mr. Trump commented as GM is preparing to cut thousands of U.S. factory jobs.

GM said the Mexico-built Cruze variant, a hatchback, is aimed at global markets and accounts for a low single-digit percentage of all Cruzes sold in the U.S. A GM spokesman declined to comment further.

The No. 1 American vehicle maker is nearly done with a $5 billion Mexican investment it began in 2012 and is shifting some of its U.S. production south of the border.

GM had largely stayed out of Mr. Trump’s crosshairs, even though its manufacturing footprint in Mexico is larger than Ford’s.

About 19% of GM’s North American production this year through October was in Mexico, versus 13% for Ford, according to WardsAuto.com.GM Chief Executive Mary Barra was among a handful of CEOs named by Mr. Trump to a business advisory group. At the time, she said she was “pleased I’m going to have a seat at the table to talk about important issues that are facing our industry.”

The auto maker recently began making the hatchback version of the Cruze at a plant in Ramos Arizpe, Mexico, but uses a factory in Lordstown, Ohio, to assemble most of the Cruzes it sells in the U.S. Hatchbacks are seen as a growing segment, while sales of the standard four-door versions built in the U.S. are slumping.

GM said it plans to cancel a shift at the Lordstown plant amid the slowing sales, resulting in 1,200 job reductions.

The Ohio plant, which has been one of GM’s busiest in the years since its 2009 bankruptcy, had been spotlighted by President Barack Obama as a symbol of the success of the government’s bailout of the auto maker. Mr. Obama visited the plant in 2009 to welcome back laid-off workers and tout his administration’s work on the bailout.

Ford CEO Mark Fields said last month he wanted to work with the incoming administration on its trade agenda, but indicated it was too late to change its plan to build the Mexico factory. A continued decline in small-car demand amid low gasoline prices likely emboldened Mr. Fields to change course.

“We see a more positive U.S. manufacturing business environment under President-elect Trump and the pro-growth policies he’s talking about,” Mr. Fields said Tuesday at the Michigan factory that will get the new investment. “This is a vote of confidence for president-elect Trump and some of the policies he may be pursuing.”

Ford in November agreed to keep production of a small volume of Lincoln sport-utility vehicles at a plant in Louisville, Ky., rather than move it to Mexico. Mr. Trump cheered the move.

Mexico’s Economy Ministry said it was disappointed by Ford’s decision and added that the company had agreed to reimburse any money spent by the San Luis Potosí state government to facilitate the plant.

“Ford’s growth in North America and particularly in Mexico has responded to a strategy of competitiveness based on global value chains, where North America competes with other regions of the world. The jobs created in Mexico have contributed to maintaining jobs in the U.S., which otherwise would have been lost due to Asian competition,” the ministry said in a statement.

The Mexican peso weakened 1% against the U.S. dollar to 20.95 by midday, close to all-time lows reached in the wake of Mr. Trump’s November election.

The auto industry accounts for a third of Mexico’s manufactured exports.

Economists worry that similar moves by other U.S. manufacturers could limit foreign direct investment in Mexico. Already, such investment has slowed.

Mexico received nearly $20 billion in direct foreign investment through the first nine months of 2016, down from $25.8 billion in the same period of 2015, according to the central bank.

While Ford still has to spend on retooling the Hermosillo plant, it will invest far less than if it were building a new factory. Under the move, it will upgrade its factory in Flat Rock, Mich., to build new electric models, including a hybrid-electric Mustang and hybrid version of its F-150 pickup truck, the top-selling U.S. vehicle and Ford’s biggest moneymaker.

Mr. Fields, speaking to reporters at the Flat Rock factory, said the decision reflects his belief that the incoming administration will implement tax and regulatory policies favorable to American manufacturing. Ford Chairman Bill Ford called Mr. Trump to inform him of the decision, while Mr. Fields phoned Vice President-elect Mike Pence.


Kommentar verfassen

Bitte logge dich mit einer dieser Methoden ein, um deinen Kommentar zu veröffentlichen:


Du kommentierst mit Deinem WordPress.com-Konto. Abmelden /  Ändern )

Google+ Foto

Du kommentierst mit Deinem Google+-Konto. Abmelden /  Ändern )


Du kommentierst mit Deinem Twitter-Konto. Abmelden /  Ändern )


Du kommentierst mit Deinem Facebook-Konto. Abmelden /  Ändern )


Verbinde mit %s

%d Bloggern gefällt das: