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Auto Investment In US by Global Manufacturers Underwhelms Despite Trump's Push


Post Date: 29 Sep 2017    Viewed: 790

  When it comes to investments by global automakers in the U.S., 2017 is shaping up to be nothing special -- even after President Donald Trump’s threats to heavily tax cars shipped from abroad.

Companies including Toyota Motor Corp., Volvo Cars and Daimler AG have announced $5.5 billion in new American factory investments so far this year, shy of the $10.2 billion averaged annually this decade.

General Motors Co. and Ford Motor Co., the two biggest U.S. carmakers, are cutting shifts or scheduling time off at plants as industry sales slow.

  The data underscores the challenge Trump has had getting a globalized industry to plow money into a market that’s shrinking for the first time in eight years. Some auto companies have responded to the pressure the president has put on them to manufacture more in America by issuing statements about investments initially disclosed years earlier.

  “A lot of what made headlines earlier this year were announcements that had previously been known,” said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research.The re-announcements reflected “political expediency” as Trump was taking office and using Twitter to criticize automakers’ investments in Mexico.Carmakers have less of a gap to close between this year’s investments and the decade’s annual average when excluding the years that the Detroit Three agreed to labor contracts with the United Auto Workers union. When backing out those years, the manufacturers announced about $6.3 billion annually, according to Center for Automotive Research data. Trump chided Ford throughout his campaign about its plans to invest in Mexico and lobbed similar criticisms at companies including GM and Toyota early this year. Vice President Mike Pence this week is making the latest trip by the administration to the Detroit area, promoting tax reform at a plant owned by American Axle and Manufacturing Holdings Inc., a parts supplier that’s shifted production to Mexico.

  Toyota, Volvo

  Spending on auto plants has picked up of late, with Toyota on Sept. 26 pledging to invest $373.8 million in five factories as it plans to build hybrid engines and transmissions in the U.S. for the first time. Volvo said on Sept. 25 it’s investing $600 million to double the size of its plant still under construction in South Carolina.

Months after Trump lamented the number of Mercedes-Benz models he sees on Fifth Avenue and the millions of cars German companies sell in the U.S., Daimler said last week it would spend $1 billion to expand its facilities near Tuscaloosa, Alabama.

   Carmakers based outside the U.S. and Tesla Inc. probably will produce more vehicles in North America than Detroit Three automakers for the first time this year, according to Joe Langley, an analyst with IHS Markit. The researcher predicts GM, Ford and Fiat Chrysler Automobiles NV will make a combined 8.6 million vehicles in the region this year, compared with 8.7 million for other carmakers. That’s a steep fall from grace -- GM by itself controlled more than 50% of the U.S. auto market in the early 1960s.

   Trump told auto workers in Michigan earlier this year he’d fight to make America “the car capital of the world again.” Toyota, Volvo and Daimler’s investments will support about 2,550 new jobs in Alabama and South Carolina. But total spending will still pale in comparison with the $26.6 billion announced in 2015, when Detroit automakers negotiated four-year contracts with the United Auto Workers. Much of the factory spending discussed in the first quarter -- Trump’s first few months in office -- was originally disclosed in 2015. For example, Fiat Chrysler announced in January that it would spend $1 billion to build three new Jeeps and a Ram pickup in the U.S., adding 2,000 jobs at factories in Michigan and Ohio. While Trump thanked Fiat Chrysler in a tweet the same day, CEO Sergio Marchionne told reporters the investment was consistent with earlier plans.

   GM, Ford and Fiat Chrysler typically announce spending plans negotiated with the UAW when each contract is being ratified. It’s typical for individual investments to be called out again later during local ceremonies or at other venues to gain political or market attention.

  “It seems like the companies were trying to make news with something everyone in the auto industry already knew,” Dziczek said.


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