Trump Extends Carrot to Detroit Three for New Plants

President Trump tells Detroit Three CEOs today he wants new assembly sites built in the U.S. and suggests eased regulations and corporate tax reforms could make up for the cost savings they now get by building more cheaply elsewhere, such as Mexico.

The sit-down with Ford, General Motors and FCA US comes on the heels of a campaign where Trump criticized the automakers for importing vehicles from plants outside of the U.S. He has pledged a 35% tariff on those products and also targeted foreign automakers such as BMW for their imports.

“We have a very big push on to have auto plants and other plants – you’re not being singled out,” he says in remarks broadcast by CNBC. “We are bringing manufacturing back to the U.S., big league.”

Flanked on camera by GM Chairman and CEO Mary Barra and FCA CEO Sergio Marchionne, Trump said smarter regulation of industries will help make new investments in the U.S. more attractive.

“We want regulations, but we want real regulations,” he says, calling some laws on the books crazy. “We’re going to make the process simpler for auto companies in the U.S.”

According to WardsAuto data, automakers sold a record 17.46 million vehicles in the U.S. last year and 9.8 million, or 56.1%, were built locally. GM produced the most in the U.S. with 2.01 million builds for 66.1% of sales, followed by Ford at 1.97 million for 77.5% of sales, and FCA US with 1.21 million for 54.6% of sales.

It is unclear exactly which regulations Trump intends to ease, but shortly after his election win in November the Alliance of Automobile Manufactures, a lobbyist for automakers, sent the president a letter complaining of inconsistent fuel-economy and tailpipe-emissions regulations.

Manufacturers also are closely regulated for emissions and safety inside their production facilities.

Trump, a prolific negotiator as a businessman, also has mentioned corporate tax codes as an area where the government could become more business-friendly. In a meeting Monday with Trump, Ford CEO Mark Fields, who also was at today’s confab, said the president was “very serious” about tax, regulatory and trade policies underpinning future business investment.

Ahead of the Tuesday meeting, automakers have highlighted recent and planned investment in the U.S. Ford canceled plans for a $1.6 billion assembly plant in Mexico and revealed intentions to invest $700 million in a Michigan facility.

GM confirmed it will invest $1 billion in the U.S. as part of a previously disclosed plan, which includes moving parts production out of Mexico to Michigan. FCA pledged $1 billion for sites in Michigan and Ohio as the second phase of an industrialization plan.

The Detroit Three CEOs have been diplomatic in their remarks about Trump and his administration’s policy intentions. Barra said at the Detroit auto show the two camps had more in common than differences although there were no intentions of adjusting the automaker’s manufacturing footprint, while Marchionne pleaded for greater clarity from the president but pledged to adjust his company’s business if the rules of the game change.

In a statement following today’s meeting, Marchionne thanked Trump for his focus on making the U.S. business-friendly.

“We look forward to working with President Trump and members of Congress to strengthen American manufacturing,” Marchionne says.

Fields after the meeting reportedly spoke of a potential “renaissance in American manufacturing,” and Barra told of a “huge opportunity” to improve the environment, safety and create jobs.

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