Trump Visit Highlights Potential Win-Lose for Automakers

WILLOW RUN, MI – The auto industry got its chance to make its case to President Trump on his visit to Detroit this week and it came away with something of a split decision.

Trump gave his blessing to a new midterm review of federal fuel-economy standards, which was something industry executives have been seeking since the process was rushed through late last year by the prior administration. But the President also pressed automakers about bringing jobs back to the U.S. and re-iterated his vow to revise NAFTA, which since the 1990s has been a significant influence in shaping automobile-manufacturing investment in the U.S., Canada and Mexico.

During a private meeting prior to his 18-minute speech before a crowd of about 1,200 employees bused to the American Center for Mobility here by General Motors, Ford and Fiat Chrysler Automobiles, Trump promises a new look at the fuel-economy standards that run through 2025 and an examination of other federal regulations that might hamper the industry’s growth and profitability.

Positioned under a “Buy American - Hire American” banner, Trump re-iterates his pledge to rollback federal regulation to the cheering crowd in old hangar that was once part of a massive plant here that built 4-engine bombers used in World War II.

“I am going to fight for your jobs,” he says.

Prior to the speech, Trump holds a roundtable with auto executives from several automakers with plants in the U.S., as well as UAW President Dennis Williams.

FCA CEO Sergio Marchionne says he is pleased with Trump’s promise to review CAFE standards.

“We all agreed that 2017-2018 will be used to carry out a thorough midterm review with the full participation of the auto industry,” he says. “I know for a fact that we were not called in (to the late-2016 review). To me it was like somebody reneged on a deal. I don’t like it.

“For all I know, we’ll confirm the numbers for 2025,” he adds. “Ultimately, all these things can be achieved at a price. That’s not the issue. At the end the day, the question is can the consumers afford to pay for the technology in the car.”

But for now, the more pressing issue facing the industry are changes to NAFTA sought by the Trump Admin., Marchionne says.

“The biggest unknown for now is the re-negotiation of NAFTA and the tax position taken by the U.S. administration,” he says. “You can’t deal with NAFTA without understanding the implications on the tax side. We’re waiting for clarity on both of those issues.

“It will be a painful adjustment for some.”

Toyota North America CEO Jim Lentz says the meeting was very positive, adding, “(Trump) is obviously tasking us and asking us to build more here.”

The president singles out GM, Ford and FCA for adding jobs in the U.S. But without naming names, he also praises European and Asian companies that operate plants in the U.S. and calls on them to create more jobs in the U.S.

Like Marchionne, Lentz praises Trump’s decision to take another look at CAFE.

“I think what the industry wants is one national standard,” Lentz says. “California has to be part of the discussion. (The California Air Resources Board) has to be part of the discussion.

“What the industry doesn’t want is fragmented standards, because that’s a disaster for the industry and a disaster for consumers because it raises prices. California has to be part of the solution.”

Trade remains a large and critical issue for the industry, Lentz says.

“Mexico is not much of a concern for us as for other companies,” the Toyota executive says. “We are a bigger player in Canada. That would be the bigger concern. We only build 6% of our vehicles in North America in Mexico.”

Lentz says Toyota produces close to 500,000 vehicles in Canada, but the company also has added 8,000 jobs in the U.S. since 2010. “We are investing heavily,” he says.

The call for a border tax, an idea that has drawn some backing within the White House and Congress, would make imports more expensive and severely challenge the auto industry, Lentz notes.

“If you look at the average monthly payment consumers are making now it’s about $470, with a $30,000 loan balance,” he says. “Five years ago it was $460 per month on a $25,000 loan balance. So consumers have done everything they can to stretch affordability.

“It could be a very quick tipping point if we price the average consumer out of buying a new vehicle,” Lentz adds, noting any reduction in the demand for new vehicles would lead to fewer jobs.

Williams has praised the president’s decision to take a hard line on trade issues, but the UAW also continues to support Trump’s opposition in the Democratic Party and the fight for the allegiance of blue-collar voters is clearly on the mind of union leaders.

Workers attending Trump’s speech say local union officials didn’t publicize the opportunity to hear Trump speak, saying the stop in Detroit wasn’t a union event, points out Paul Thayer, a skilled tradesman employed at FCA’s Warren (MI) Stamping plant.

“They don’t like Trump,” says Thayer, who was one of 45 employees to use the bus arranged by FCA to bring people to the event.

UAW spokesman Brian Rothenberg declines to comment on the president’s visit, but the resistance to Trump seemed to have an impact on the event, where a large section of seats went unfilled.

Trump makes plain he plans to hang on to the blue-collar voters he won over during last year’s campaign if he runs for re-election in 2020. He tells the cheering crowd he will end for good the flight of jobs and factories from states such as Michigan, Wisconsin, Ohio and Pennsylvania.

All four of those states were critical to Trump’s surprise victory over Democrat Hillary Clinton.

There’s a mix of sentiment about Trump among the workers attending the speech.

“I don’t have confidence in any of our politicians,” says Allen Corn, an FCA skilled tradesman who took the opportunity to hear Trump speak.

“We love that man,” says Deborah Fuqua-Frey, a retired union member and former employee of a one-time GM Hydra-Matic transmission plant on the grounds here. “He’s going to make America great again.”