Trump victory jolts automakers
GM announces layoffs at factories in Ohio, Michigan
The election of Republican Donald Trump as US president put new pressure on automakers and other manufacturers that depend on open trade with Mexico.
Shares fell for US automakers and suppliers, which rely heavily on production in Mexico to feed their US manufacturing and sales operations.
General Motors Co shares dropped as much as 4 percent on Wednesday before recovering some of that decline in the late afternoon.
The automaker said on Wednesday it was laying off 2,000 people and cutting a shift at a Lordstown, Ohio factory that builds Chevrolet Cruze small cars and at a Lansing, Michigan plant that builds slow-selling Cadillac sedans and Chevrolet Camaro sports cars.
Ford Motor Co shares were up 1.2 percent in late afternoon trading after sliding earlier in the day.
Electric luxury car maker Tesla Motors Inc shed 3.3 percent. Tesla could be hurt if a Trump administration cuts federal support for electric cars.
Shares of big automotive parts makers that have shifted operations to Mexico were hit hard. Delphi Automotive Plc fell nearly 6 percent after rebounding from deeper losses.
Canada’s Magna International Inc, whose Mexican operations account for about 14 percent of sales, were down 3.7 percent.
Trump made attacks on the outsourcing of American auto jobs to Mexico a recurrent theme in his campaign, a message that rallied blue-collar workers while threatening to upend the business assumptions behind billions of dollars in planned investment by the auto industry.
Tension over Ford plants
In announcing his campaign in June 2015, Trump vowed to block Ford from opening a new plant in Mexico and threatened to impose tariffs on cars it shipped back across the border.
But those moves would force US consumers to pay higher prices for vehicles, said Charles Chesbrough, senior economist at the Detroit-based Original Equipment Suppliers Association trade group.
“[Trump’s] trade policies could add $5,000 or more to the price of a small car from Mexico,” Chesbrough said.
US vehicle manufacturers and many of their suppliers have based billions of dollars of investment on rela-
tively open trade with Mexico, China and other countries. Ford in April announced plans to invest $1.6 billion to expand production of small cars in Mexico. Trump took aim at that move as well as GM’s plans to invest $5 billion there.
GM said in a statement on Wednesday that it “looks forward to working with President-elect Trump and the new Congress on policies that support a strong and competitive US manufacturing base.”
Ford spokeswoman Christin Baker said: “We agree with Mr Trump that it is really important to unite the country, and we look forward to working together to support economic growth and jobs.”
In September, Ford said it would shift small-car production from US plants to lower-cost Mexico, drawing another rebuke from Trump.
“We shouldn’t allow it to happen,” Trump said.
The company said its decision to build new vehicles in Mexico would not cost US jobs.
Ford Executive Chairman Bill Ford last month said he met with Trump to discuss criticism from the candidate but called the discussion “infuriating” and “frustrating.”
Ford said his company employed more people at its US plants than any other automaker. Ford has not slowed investment outside the US. As ballots were cast in the US on Tuesday, Bill Ford was in India to announce a $195 million investment in a new technical center near Chennai.
Between 1994 and 2013, the number of auto factory jobs fell by a third in the US and rose almost fivefold in Mexico as lower-wage production boomed.
Mexico now accounts for 20 percent of all vehicle production in North America and has attracted more than $24 billion in investment from the industry since 2010, according to Ann Arbor, Michigan-based Center for Automotive Research.
Based on current investment plans, Mexico’s auto production capacity will grow by another 50 percent over the next five years, said the center, which draws funding from companies in the industry.
“Dismantling NAFTA [North American Free Trade Agreement] at this point would be pretty hard to do,” said Kristin Dziczek, the center’s director of industry, labor and economics.