As UK Prime Minister,
Teresa May, become the first foreign leader to meet new US President Donald
Trump, focus will be on trade. And trade with Trump will be the one notion that
senior executives in the global automotive industry this weekend will be the
mulling the implication of Trump’s inauguration.
For
sure, his appointment will carry wide-ranging implications, not least for
automakers with plants in Mexico. Not the least of these will be the extra work for front-of-office staff who have to work through the financial impact as facts unfold. Especially will this be so for those responsible for working out new transfer pricing strategies.
In 1910, Daimler and Renault were the first to
establish automotive operations in Mexico. They were short-lived. Today, Fiat Chrysler
Automotive has three plants, Ford Motor Company has three, General Motors four,
Mazda Motor Company one, Honda Motor Company two, Nissan Motor Company three,
Toyota Motor Company one (with another at Baja expected) and Volkswagen AG two.
In trucks, Daimler’s name can still be linked
to Mexico. Daimler AG claims to be the largest truck and tractor truck
manufacturer in North America. In Mexico, Daimler Trucks (pictured below) has two manufacturing
plants located in Santiago Tianguistenco, State of Mexico, and in Saltillo,
Coahuila; plus an International Parts Distribution Centre in San Luis Potosí,
an engine and components remanufacturing plant in Toluca, State of Mexico, and
a dealer network comprised of more than 83 sales and service points nationwide.
Daimler
claims that its TMPs (Truck Manufacturing Plants) are responsible of more than
50 per cent of the total truck and tractor truck production in Mexico. Daimler
Trucks Mexico employ.
And it
must not be forgotten, that of Ford Motor Company's operations in
Mexico, not the least of these is the Chihuahua Engine Plant which makes the
6.7-itre Power Stroke engine for class-leading F-150 pick-up trucks.
It is
hardly surprising that Mexico will be top of any agenda set to be discussed
around Europe tomorrow (Monday).
And these automakers will be joined in 2019 by
BMW. Prior to his inauguration, Trump warned that the United States will impose
a border tax of 35 per cent on cars that German carmaker BMW plans to build at
a new plant in Mexico and export to the US market.
Whether this ‘threat’ comes to pass remains to
be seen. If it does it will have a major impact on US sticker prices on the
forecourt.
Polite and diplomatic
Trump
was speaking in an interview with German newspaper Bild, which released excerpts of his comments translated into
German.
BMW responded in a typically polite and
diplomatic manner. Something Trump may have to learn.
"BMW is a global company and our new
plant now under construction in San Luis Potosi, is part of our expanding
global production network of 31 plants in 14 countries that supply our
worldwide sales network in more than 140 countries."
"Construction is progressing in order to
meet the scheduled 2019 production start and the BMW 3 Series Sedan will be
built at the plant from 2019 onwards. Production is planned for the world
market, not only North America, and the planned capacity will be a maximum of
150,000 units," the spokesman added.
Automotive plants in Mexico likewise are vital
not only for the economy of the country but for each and every manufacturer,
which is why the subject will be uppermost in the minds of those at the most
senior level of companies affected.
And of course, it is not only vehicle builders
who will be affected; component makers too are essential for the life and blood
of the industry, and thus includes foundries.
For some of the most senior automotive
executives, the Trump effect is not the only thorn in their side. The other is
Brexit and already Nissan chief executive officer Carlos Ghosn has declared
that Nissan will review the competitiveness of its car plant in Sunderland once
the final outcome of Brexit negotiations becomes clear.
The car manufacturer announced in October that
it was investing in production of new Qashqai and X-Trail models at Sunderland
after receiving Government assurances that EU withdrawal would not affect the
plant's competitiveness.
Speaking to reporters at the World Economic
Forum in Davos, Switzerland, Ghosn said the company trusted Prime Minister
Theresa May's assurance, but added that Nissan would want to "re-evaluate
the situation" once the final deal is concluded.
Ghosn is not the only one with such thoughts
in mind. Top level people in BMW, Honda and Toyota will be doing likewise, as
will executives of two other international companies - Ford Motor Company and
JaguarLand Rover. Even internationally owned Aston Martin will not be able to
put the matter in its 'out tray' as a new way have to be found by way of doing
business under Trump's seemingly isolationist regime.
2 comments:
EPA will not be almost closed as some belived
Scott Pruitt, facing U.S. senators in his bid to be confirmed as nominee to head the EPA, distanced himself from candidate Donald Trump's promise to "gut" the agency and his claim that climate change is a hoax perpetrated by China.
"Science tells us that the climate is changing and that human activity in some manner impacts that change," he said. "The ability to measure with precision the degree and extent of that impact and what to do about it are subject to continuing debate and dialogue, and so they should be."
Responding to a direct question about Trump's campaign rhetoric, Pruitt said: "I do not believe that climate change is a hoax."
http://www.autonews.com/article/20170123/OEM11/301239812/epa-nominee-calls-for-co2-rule-review
On the issue of Mexican manufacturing for the US market, it'll be interesting to see whether Trump takes a tougher line with non US-owned auto makers, eg Toyota, Daimler, VW, than with the so-called Big Three. And even there he might be torn over the ownership status of Fiat-Chrysler.
Post a Comment