There is no doubt Fiat Chrysler Automobiles (FCA) CEO Mike Manley has some large shoes to fill after the death of Sergio Marchionne last month. One of Manley’s first big public events as CEO of the automaker was to meet with President Donald Trump and other CEOs from across the nation to discuss trade. Since taking office in January of 2017, President Trump has praised FCA and Sergio Marchionne about their decision to move production of the Ram Heavy Duty truck from Saltillo, Mexico to Warren, Michigan.
Chrysler is moving a massive plant from Mexico to Michigan, reversing a years long opposite trend. Thank you Chrysler, a very wise decision. The voters in Michigan are very happy they voted for Trump/Pence. Plenty of more to follow!
— Donald J. Trump (@realDonaldTrump) January 12, 2018
President Trump at a meeting with the heads of Ford, General Motors and FCA jokingly called Sergio Marchionne, “my favorite”. There is no doubt the free publicity hasn’t hurt FCA.
Marchionne stated in several interviews that the move of the Ram Heavy Duty trucks was not just because of President Trump, but were because the company felt that it owed the people of Michigan to take the truck back to production in Michigan after the Saltillo plant took over all Ram Heavy Duty production in 2008.
The heavy-duty truck, at least in Chrysler’s case, was moved to Mexico in 2008. Ninety percent plus of what gets produced out of Mexico gets sold in the United States. I think this notion of making a car which has got nearly 100 percent utilization in the United States is a bit bizarre. I think it should have never been moved. – Sergio Marchionne to CNBC on 1/16/2018
Currently the Saltillo plant builds all Ram 2500, 3500, 4500 and 5500 Heavy Duty and Chassis Cab trucks, as well as all regular cab Ram 1500 models and builds other Ram 1500 models for export and for Mexico distribution. The Saltillo plant will soon be converted to build global mid-size trucks for the Fiat and Ram brands after the full-size trucks are moved back to the United States.
Manley plans on keeping that relationship with the Trump administration strong.
Many automakers have been publicly lobbying against the Trump administration’s consideration of placing tariff on imported cars, which automakers are saying could cause retaliation from other countries, slow sales and force them to lay off workers. Although, FCA is in better shape than most other manufacturers because a majority of it’s best performing vehicles for sales are produced in the United States. However, it could effect vehicles like the Jeep Compass and Jeep Renegade which are built in Mexico and Italy.
America’s trade in cars and car parts with the rest of the world amounted to more than $470 billion last year, with passenger-car imports outpacing exports by about $135 billion.
What the Trump administration is looking for is a fair trade deal for vehicle tariffs like China. China puts tariffs up to 25% on American produced vehicles into their country. However, since the Trump administration has talked about placing an equal tariff on vehicles imported to the United States from China; China has lowered their tariffs starting on July 1st to 15%. Still far away from the tariff of 2.5% for vehicles like the Buick Envision that are built in China and sent to the United States.
However, since July 1st China has imposed new duties on $50 billion worth of American products.
Still, arguments in favor of tariffs go like this: Europe currently charges a 10 percent tariff on United States cars, and the United States charges only 2.5 percent on European cars, and that imbalance is not fair. To be sure, the United States also tacks on a 25 percent tariff on light trucks from Europe, though most vehicles imported from Europe are German luxury cars such as BMW, Mercedes and Audi. A level playing field might give automakers more incentive to manufacture vehicles in the United States.
Manley attended the event last night along with executives from companies including PepsiCo Inc., Boeing Co. and FedEx Corp. The president was joined by aides including daughter Ivanka Trump and son-in-law Jared Kushner; Larry Kudlow, his top economic adviser; and deputy chief of staff for policy coordination Chris Liddell.