A year after dressing down carmakers for cutting US jobs due to trade agreements and automation, has President Donald Trump delivered on his vow to turn the tide?
A year after dressing down carmakers for cutting US jobs due to trade agreements and automation, has President Donald Trump delivered on his vow to turn the tide? The US president got some good news just four days before the Detroit auto show when Fiat Chrysler announced it would shift production of its Ram 1500 to Michigan, adding 2,500 jobs. “Thank you Chrysler, a very wise decision,” Trump said on Twitter. “The voters in Michigan are very happy they voted for Trump/Pence. Plenty of more to follow!” Notwithstanding FCA’s announcement last week, the overall picture for US auto jobs has been much less impressive in the year since Trump became president, jobs figures show.
Net employment in the auto sector (manufacturing and suppliers) stood at 783,200 at the end of November, down from 788,900 at the end of 2016, according to the US Bureau of Labor Statistics. “Overall, US auto employment was down slightly last year. Sales and production were also down, and employment is closely tied to output,” said Kristin Dziczek, an expert at the Center for Automotive Research. Under pressure from Trump, General Motors promised last March to add or retain 900 jobs in Michigan over 12 months. But even if the biggest US automaker made good on that pledge, its overall US hourly workforce dropped to 52,000 at the end of 2017 from 55,000 a year earlier.
GM said the fall was due to shifting US consumer buying trends, which led to “actions we took at a few car plants in 2017 to adjust production as the market shifted from cars to crossovers/SUVs,” said GM spokesman Patrick Morrissey. “Consumer preferences have rapidly shifted from cars to crossovers and trucks,” said Dave Sullivan, an expert at AutoPacific.com, confirming GM’s stance.
Examples of GM factories hit by the company’s austerity include Lordstown, Ohio, where the Chevrolet Cruze is produced and Grand River, Michigan, which manufactures the Cadillac CTS and ATS and the Chevrolet Camaro. Ford has reversed a promise to keep production of the Ford Focus in Grand River, Michigan and will shift the manufacturing to China.
Trump’s agenda includes tax reform, trade agreement rewrites, regulatory reform and workforce policy. With the exception of tax reform, “most of these issues have not yet been finalized,” said Keith Belton, who directors the manufacturing policy initiative at Indiana University. But “it is clear that the Trump administration has put manufacturing issues on its policy agenda,” Belton added.
Data show US car imports have risen from overseas manufacturing centers, including China, India and Mexico, which saw a 9.4 per cent rise in car exports to the US in 2017 from a year earlier. But the enactment of US tax reform could change the picture, creating incentives for companies to produce in the US because of a lower tax rate.
Passage of the tax cut likely helped seal Toyota and Mazda’s decision announced last week to build a new factory in Alabama, said Cox Automotive economist Jonathan Smoke. “In and of itself it (lower taxes) probably wouldn’t be the single factor, but it probably helps to probably be the tiebreaker if you’re trying to make the decision,” Smoke said.
Still unresolved are talks between the US, Mexico and Canada on a revamped NAFTA. The great fear is that a US exit from NAFTA means vehicles now made in Mexico and exported to the US could face tariffs of 25 percent. If a company decides that scenario is realistic, “then a decision to do something new in US vs Mexico suddenly becomes, ‘Oh, the US is favorable because that takes that risk off the table,'” Smoke said
Many automakers say it is too soon to make any decisions because of NAFTA. “We continue to evaluate our footprint on an ongoing basis,” said Dan Ammann, president of GM, which exports trucks from Mexico to the US.