What’s really ‘happening’ between Donald Trump and Fiat Chrysler? – Washington Post

Posted: Monday, January 09, 2017

Fiat Chrysler’s newly unveiled plan to grow two U.S. auto plants, creating 2,000 new jobs in the Midwest, drew praise Monday from President-elect Donald Trump. 

“It’s finally happening,” Trump tweeted. “Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2000 jobs.”

While Trump has repeatedly slammed automakers for outsourcing work to Mexico, Fiat Chrysler insisted its move was part of a year-old business strategy and not a response to presidential goading. It will continue to make hundreds of thousands of cars south of the border and sell them on American soil.

New policies under the Trump administration, however, such as a proposed 35 percent tax on goods from Mexico, could warp the company’s future.

“It’s possible that if the economic tariffs that are imposed by the U.S. administration on anything that comes into the United States, if they are sufficiently large, it will make the production of anything in Mexico uneconomical,” Fiat Chrysler chief executive Sergio Marchionne said Monday in Detroit, “and therefore we will have to move on.”

The Italian American auto giant said Sunday that it will expand plants in Warren, Mich., and Toledo, which are slated to produce new Jeep trucks and SUVs, including the much-hyped luxury Wagoneer. The plan aligns with the company’s goal to focus more on trucks and SUVs as demand shrinks for smaller cars. (Fiat Chrysler would not provide details about the future 2,000 positions.)

“These investments and these products being built in Michigan and Ohio have always been planned — we’ve just been waiting for them to make the announcement,” said Michelle Krebs, a senior analyst for Autotrader in Detroit. “They’re just making sure they tout it earlier and louder so President-elect Trump hears them.”

Otherwise, she said, the company could incur his wrath.

The automaker, which saw a 1.69 percent share value boost Monday morning, said it will also equip the Michigan factory to assemble Ram heavy-duty models, which are made in Mexico — but only if demand spurs a production upswing, a representative clarified Monday. 

The company has no plans to move any of its truck line north of the border.

Since the new year dawned, Trump has slammed two auto juggernauts for building cars outside the United States, triggering dips in their stock value. Fiat Chrysler has appeared to ward off his criticism.

The automaker runs seven facilities in Mexico, according to its website, and shipped nearly 477,000 vehicles in 2015. About 91 percent of those cars and trucks were sold in the United States, a representative said. 

Trump blasted General Motors on Jan. 3 for making a much smaller number of U.S.-sold Chevrolet Cruze hatchbacks in Mexico: About 4,500 of the models were peddled here last year. He condemned Toyota two days later for planning to construct a new Mexican plant. (The company operates one in Baja, Mexico.)

Fiat Chrysler timed its announcement for the North American International Auto Show, which kicked off Sunday in Detroit, a representative said. Asked about future investments in Mexico, Marchionne, the chief executive, poked at uncertainty under Trump, saying he won’t change course in the country without a stronger understanding of the future trade climate.

“I need clarity,” he told reporters in Detroit. “I need rules. And right now, they’re all on the table.”

Trump, meanwhile, has said he wants to punish companies that outsource manufacturing jobs with steep tariffs and “terminate” or renegotiate the North American Free Trade Agreement, which enables a flow of goods between the United States, Mexico and Canada. Since late November, the president-elect has singled out individual firms on Twitter and reached a shadowy deal with Carrier, the air conditioning company, to keep 800 jobs earmarked for Mexico in Indiana.

More on Wonkblog:

The real reason Ford abandoned its plant in Mexico has little to do with Trump

What Americans really think about free trade

A new theory for why Trump voters are so angry — that actually makes sense

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