Donald Trump's Tweets, News Conference Aside, GM Isn't Leaving Mexico

At his first news conference since July, President-elect Donald Trump nudged General Motors to follow the lead of Detroit’s other Big Three automakers by expanding their operations in Michigan. Trump said Wednesday he hopes GM “will be following” rivals Ford Motor Co. and Fiat Chrysler Automobiles, which previously announced they’ll expand plants in Michigan.

Fiat Chrysler is investing $1 billion in existing plants in Warren, Michigan, and Toledo, Ohio, to produce the Jeep Wagoneer, Grand Wagoneer and a Jeep pickup truck. About 2,000 jobs will be created between the two Rust Belt states.

“You saw yesterday, Fiat Chrysler — big, big factory going to be built in this country, as opposed to another. Ford just announced that they stopped plans for a billion dollar plant in Mexico, and they’re going to be moving into Michigan and expanding very substantially an existing plant,” Trump said during the news conference in the lobby of Trump Tower in New York City. “I appreciate that from Ford. I appreciate that very much from Fiat Chrysler.

“I hope that General Motors will be following. I think they will be.”

At the North American International Auto Show in Detroit Sunday, GM Chairwoman and CEO Mary Barra told reporters the company has no plans to shut down production of the Chevrolet Cruze Hatchback in Mexico, The Detroit News reported.

“This is a long-lead business with high capital-intensive investments, decisions that were made two, three and four years ago,” Barra said.

Barra’s comments came after Trump tweeted that GM would face a “big border tax” if any of the compact sedans manufactured in Mexico are imported to the United States. Only the hatchback models are built there; the majority of the compact sedans are assembled in the Cleveland suburb of Lordstown, Ohio.

Throughout the campaign and since his election in the Nov. 8 presidential election, Trump has proposed imposing punitive, 35 percent tariffs on vehicles and parts that are currently manufactured in Mexico and Canada but enter the U.S. market tax-free. He also wants to tear up the North American Free Trade Agreement, which he claims has cost U.S. workers hundreds of thousands of jobs.

Other executives attending the auto show in Detroit said they’re nervous about the effect Trump’s trade policies will have on their multinational business models, the Detroit Free Press reported.

If Trump unwinds NAFTA and automakers can no longer move cars and parts tariff-free in Canada, Mexico and the United States, it will disrupt business plans put in place years before and perhaps trigger retaliatory action by U.S. trading partners, they said.

“If economic tariffs are imposed ... and are sufficiently large, it will make production of anything in Mexico uneconomical, and we would have to withdraw,” Fiat Chrysler CEO Sergio Marchionne said. “It’s quite possible.”

That could have a ripple effect, Marchionne said, and jeopardize supplier jobs in the United States.

Not Quite What They Said

In the news conference Wednesday, Trump said he’s putting U.S. businesses on notice to invest domestically and hire U.S. workers.

“The word is now out that when you want to move your plant to Mexico or some other place, and you want to fire all your workers from Michigan and Ohio and all these places that I won — for good reason — it’s not going to happen that way anymore,” he said.

Trump was fuzzy on some details of the Michigan-based automakers’ plans to invest in the United States, though.

He said Fiat Chrysler is building a new factory — it isn’t — and that Ford Motor Co. is pulling out of Mexico. That’s not correct, either.

Ford did announce it will invest $700 million in a suburban Detroit plant, creating 700 jobs to build autonomous and electric vehicles, along with the Mustang and Lincoln Continental. The Dearborn-based automaker hasn’t pulled back on plans to make its Ford Focus vehicles at a plant in Mexico, where Ford has had a presence for more than 90 years and employs more than 8,800 people.

Trump said during the news conference that manufacturers “can move from Michigan to Tennessee, and to North Carolina and South Carolina (and) from South Carolina back to Michigan.”

“I don’t care as long as it’s within the borders of the United States,” he said. “There will be a major border tax on these companies that are leaving and getting away with murder.”

During the early days of his candidacy in August 2015, Trump called on Detroit’s Big Three automakers to pull up stakes in Michigan and relocate to lower-wage states with lower energy costs. The suggestion, more of a trial balloon than a policy position, was an opening salvo in what has become a shaky relationship with the auto industry.

Automakers do expect a more favorable regulatory climate under Trump and have asked the president-elect to relax gas mileage standards put in place by the Obama administration.

Photo by Gage Skidmore via Flickr Commons