During the election campaign, Donald Trump criticized automakers for moving production to Mexico, promising big tariffs on imported goods if he won the election. After winning, he stepped up those criticisms, calling out General Motors (GM), BMW, and Toyota for production decisions.
With that attention on manufacturing location decisions, automakers at the 2017 North American International Auto Show in Detroit, Michigan, all tried to top the others with stories about how American their products are.
Ford got the ball rolling the week before the show, announcing $700 million in investments in Michigan for battery-powered cars and the cancellation of a $1.6 billion planned plant in Mexico. Fiat Chrysler Automobiles (FCA) topped that with a $1 billion pledge for Jeep production in Ohio and Michigan.
Once the show actually started, each company provided its red, white, and blue credentials – Toyota’s Camry is the most American-made car in the country; Honda has invested more than $20 billion in the U.S. in the past 30 years; BMW exports thousands of cars every year from South Carolina to Europe; the vast majority of Nissans sold in the U.S. are made in the U.S., GM employs more Americans than any other automaker.
Chinese producer Guangzhou Automobile Motor Co. Ltd. (GAC) delivered a mixed message. On one hand, officials insisted that the company will eventually enter the U.S. market, and a technical center in Michigan supports those ambitions. On the other hand, a company spokeswoman bragged about how all the vehicles on stage from the state-owned enterprise were proudly made in China.
Clearly, manufacturing location decisions are part of the national dialog, and the overt display of American patriotism reflects that. However, executives have spent the past 20 years breaking down regional barriers to make the automotive industry global.
Few vehicles for sale today haven’t had parts designed in Korea, Japan, Germany, and the U.S. Automation and improved assembly technology have eliminated cross-border quality concerns, making it possible to export cars from Mexico and China into the U.S. Cars assembled in the U.S. use parts from four continents.
When GM and Ford faced massive economic challenges before the recession, both companies followed the same basic strategy – scrap single-country vehicles in favor of models that could be designed once and sold worldwide. That consolidation of engineering effort led to vehicles such as GM’s Chevrolet Cruze that could be produced in Mexico, Ohio, Korea, or Germany – giving the flexibility to transfer vehicles from one country to the next.
Historically, the automotive industry operated in highly nationalist markets, and many companies did so quite profitably. Globalism, however, allowed them to take full advantage of technical expertise and design prowess. That strategy could now be threatened by a tightening of border restrictions between countries.
For now, the only big signs of change are some flag-wrapped speeches on an auto show stage and a handful of product manufacturing announcements that were in the works well before the election. But the move away from global sourcing and trade could threaten the status quo of the industry, so it’s a trend that bears watching.