Background first: There’s a massive shifting of manufacturing in the auto-industry and President Donald Trump is at the center of it. The USMCA trade agreement is the newly constructed Trump fulcrum underneath the structure of all auto manufacturing. POTUS Trump has shifted the location of this fulcrum through auto-tariffs; and the final determinations therein are still ongoing.
On Tuesday, POTUS invited the EU auto executives to the White House. No doubt Trump, the executive businessman, was seeking to understand their position on how the EU crew will comply with a 75% USMCA rule of origin…. and feel-them-out over what leverage he could apply (tariff threshold) to enhance their manufacturing relocation decision.
Example: With tariff at 2.5% they won’t move anything just pay the duty; however at 10% or higher they might move engine building or transmission building to North America etc to get inside the rules of origin threshold. Trump was likely exploring the Mercedes, VW and BMW perspectives while Angela Merkel was gnashing her teeth… “curse you villian”.
President/Businessman Trump is setting up a future for high-wage U.S. manufacturing workers. POTUS is in apex predator mode… the combination of USMCA and tariff possibilities are like blood in the water surrounding: Dr. Dieter Zetsche (Mercedes), Dr. Herbert Diess (VW), and Dr. Nicholas Peter (BMW); while Trump asks questions.
Mike Manley the new CEO of Fiat Chrysler wants nothing to do with that scenario. He ain’t about to get in the water. Swimming with Trump? Oh, hell to the no:
(CnBC) Fiat Chrysler, riding a wave of strong truck and SUV sales, is planning to build a new final assembly plant in Detroit even as other American automakers scale back operations in the U.S., according to people familiar with the plan.
The assembly plant, an old Mack II Engine Plant that closed in 2012, will build a new three-row, Jeep Grand Cherokee SUV starting in 2020 as the automaker moves to keep up with strong demand for utility vehicles, the people said. A spokesperson for Fiat Chrysler would not comment on the report, nor confirm the automaker’s plans.
The move comes as the industry faces pressure from President Donald Trump to keep manufacturing jobs in the U.S. and stands in stark contrast to the recent decision by General Motors to stop production and idle five plants in North America including four in the United States. (read more)
Fiat Chrysler’s Mike Manley watched legendary CEO Sergio Marchionne dealing with President Trump in 2017 during two sets of meetings with key auto leaders [Marchionne seated at Trump’s immediate left above]. POTUS and titan Marchionne got along great; both old school deal-makers. Lots of respect between the two leaders.
No doubt Mike Manley took heed of Sergio Marchionne’s approach when he took over as CEO of Fiat Chrysler earlier this year due to Marchionne’s untimely death.
Meanwhile the German crew have Angela Merkel to deal with. Not so good. Trump is really close to leveraging massive tariffs on Fraulein Merkel’s primary industry. Oh yeah, this stuff is buckets of fun.
Geopolitical-strategy-Trump doesn’t care about delicate sensibilities, and Merkel is trying to have her cake and eat it too with NATO defense (U.S. pays) and self-serving energy contracts with Russia (Germany saves). Chancellor Merkel’s economic slip is showing and she is totally exposed to the massive leverage President Trump holds.
I can only imagine Merkel sitting in her office wondering: “how exactly did we get ourselves into this position, and never notice while we were traveling here”?
Methinks we might just see more Audi, VW, BMW and Mercedes auto plants. And I guarantee you we will see more Audi, Volvo, VW, BMW, Mercedes, Toyota (Lexus), Honda (Acura) and Nissan (Infinity) SUV component plants…. [Just like the Fiat Chrysler announcement today.]
Audi (Q7, Q5), Volvo (XC-90) and additional Mercedes (SUV) component production and manufacturing assembly plants will likely be crunching the numbers based on their Tuesday meeting.
Oh, this stuff is buckets of fun.