Global auto executives at the Detroit auto show are highlighting their investments in the United States, mindful of President-elect Donald Trump’s attacks on automakers for building vehicles in Mexico.
Fiat Chrysler Automobiles Chief Executive Sergio Marchionne said on Monday that uncertainty over Trump’s trade and tax policies could lead automakers to delay investments in Mexico, and he confirmed plans to create 2,000 jobs at Fiat Chrysler’s U.S. factories.
“The reality is the Mexican automotive industry has now for a number of years been tooled-up to try and deal with the U.S. market. If the U.S. market were not to be there, the reasons for its existence are on the line,” Marchionne told reporters at the North American International Auto Show in Detroit.
FCA announced on Sunday it would spend $1 billion to retool factories in Ohio and Michigan to build new Jeep sport utility vehicles, as well as a pickup truck, and potentially move production of a Ram heavy-duty pickup truck to Michigan from Mexico.
On Monday, Ford confirmed it would build a new Ranger pickup and a new SUV under the storied Bronco name at a Michigan factory that currently builds Focus small cars. During the 2016 presidential campaign, Trump criticized Ford’s announcement last year that it would move Focus production to Mexico.
Last week, Ford scrapped plans to build the $1.6-billion Focus plant in Mexico and said it would invest $700 million in a factory in Michigan.
Executives at Ford (F), Fiat Chrysler (FCAU) and other automakers said during interviews at the auto show their investment decisions were driven by business considerations, not Trump’s comments.
Most major automakers in the U.S. market have substantial vehicle-making operations in Mexico, as well as complex networks of parts makers that supply their factories in the United States and support jobs and investment in states such as Ohio and Michigan.
Trump praised Ford and Fiat Chrysler’s latest announcements on his Twitter account on Monday.
“It’s finally happening – Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2000 jobs,” Trump said in a tweet. In a follow-up tweet, he added: “Ford said last week that it will expand in Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford & Fiat C(hrysler).”
INVESTING IN THE UNITED STATES
Trump’s focus on U.S. automotive jobs, and uncertainty over what policies he may introduce, have been central topics of discussions among industry officials at the annual auto show. Companies ranging from General Motors (GM) to Honda Motor (HMC) to Daimler AG (DDAIF) used the show to highlight new U.S. investments.
Toyota Motor (TM) will invest $10 billion in the United States over the next five years, the same as in the previous five years, North America Chief Executive Jim Lentz said Monday.
Honda will build a new hybrid model that does not have a gasoline counterpart in its lineup. The hybrid will be made in the United States in 2018 at an existing plant, and Honda said it would boost investment at its transmission plant in Georgia.
Daimler AG Chief Executive Dieter Zetsche said Sunday the German automaker planned to invest another $1.3 billion to expand sport utility vehicle (SUV) production at a factory in Alabama.
German automaker Volkswagen AG (VLKAY) plans to invest $7 billion in the United States between 2015 and 2019. It is weighing whether to build an electric SUV in the United States or Mexico, Hinrich Woebcken, chief executive of the North America Region, told Reuters on Sunday.
Volkswagen has had a plant in Mexico for 50 years and it is not shifting any jobs to Mexico from the United States.
“We do not make our investment decisions based on administrative cycles,” Woebcken said on the sidelines of the Detroit auto show.
FCA’s Marchionne said Monday his company’s decision to invest in expanded truck production in the United States “was in the works and has been in the works for a long period of time.”
Marchionne wanted to get out the news about adding jobs and investment in the United States in case the company encountered more criticism from Trump, a person familiar with the situation said on Sunday.
ADJUSTING TO TRUMP
Marchionne said he has not made a decision on whether to move production of certain Ram heavy-duty pickups from Mexico to the United States, in part because of uncertainty about tariffs.
“There’s no commitment to move the heavy-duty. If tomorrow morning President-elect Trump decides to impose a border tax on anything that comes up from Mexico, then we’ll have to adjust.”
Also on Monday, Toyota‘s Lentz warned that a “border adjustability tax,” could add $1,000 to the cost of a Kentucky-built Camry sedan, because it has foreign-made parts.
Ford Motor Chairman Bill Ford Jr and GM Chief Executive Mary Barra have, separately, spoken with Trump in recent days.
Ford said he has been “in relatively frequent contact with him.” He said he was encouraged that overhauling the corporate tax code was high on Trump’s agenda.
Barra on Sunday said tax reform and “streamlining regulations … are just two areas that would be extremely beneficial” for Trump to address.
Trump has criticized GM for building cars in Mexico while laying off workers in the United States. Barra, who is on an advisory committee to Trump, told reporters that decisions about where to build specific vehicles are made “two, three four years ago.” Overall, she said of Trump, “we have much more in common” than areas of disagreement.
Marchionne said he had not spoken with Trump or anyone on the presidential transition team. Trump takes office Jan. 20.
