Automotive manufacturing leaders met in Kentucky this week to discuss how changes in U.S. trade policy under President Trump affect the industry and its growing presence in the Ohio Valley.
Industry leaders gathered for the annual AutoVision conference and many don’t like what they see coming.
NAFTA 2.0 negotiations are ongoing, companies are paying tariffs for some steel and aluminum imports and domestic metals prices are increasing as demand goes up. Add to that the prospect of auto import tariffs President Trump is exploring and executives like John-Mark Hack see trouble ahead.
“Anytime that you use government to choose winners and losers you create uncertainty in the marketplace and that’s rarely good for business,” Hack said.
Hack is with the Bristol Group, a commercial construction firm based in Lexington, Kentucky. He said the national security tariffs on foreign steel have caused the price of American steel to go up. That not only affects the price of cars and trucks, it also means the cost of constructing or expanding a facility will increase. And Hack said the administration’s approach to tariffs and trade ignores the global nature of the modern auto industry.
“What is an American made vehicle at this point?” Hack asked. “There are cars produced in every state from Michigan to Georgia and that are not made by quote- unquote American companies.”
Companies can apply for exemptions to the tariffs through the U.S. Department of Commerce. Some area manufacturers, like Constellium, with a location in Bowling Green, Kentucky, have already applied for exemptions to aluminum tariffs.
But the process can be burdensome and risky as Michael Rodenberg, President and CEO of Murakami Manufacturing USA, located in Campbellsville, Kentucky, points out.
Rodenberg said he isn’t sure it’s worth applying for tariff exemptions because of all the financial and proprietary information that would be made public.
“It’s not so much the intellectual property around it but all the financial data you have to share,” Rodenberg said. “The details, the level of detail they’re asking for, that is just a concern.”
Misti Rice directs government affairs for Magna International, an automotive supplier with about 19 locations in the Ohio Valley region and more than 27,000 U.S. employees. Rice said Magna has lost $60 million from the steel and aluminum tariffs so far and expects to lose another $30 million by the end of the year.
“We believe that this is an industry under siege,” she said.
Rice also challenges the administration’s justification for tariffs.
“We reject the implication that this is any kind of a national security threat,” she said.
Ann Wilson is the Senior Vice President of Government Affairs for the Motor Equipment and Manufacturers Association, a trade association for the auto industry. She argued that the tariffs on steel, aluminum and possible taxes on auto parts and vehicles could become the real economic security risk.
“Large global players may decide to manufacture other places,” she said. “They may take their investment other places.”
Wilson said once companies move a facility or jobs to another country in response to tariffs they aren’t likely to move those jobs back. She said some vehicle manufacturers are saying they may not be able to make it another calendar quarter without having to look at cutting jobs.
“What you hear your customers and vehicle manufacturers say in Washington is look, if our demand goes down, jobs are going to go down and we’re all going to suffer,” Wilson said.
The Commerce Department is currently investigating whether imports of vehicles and parts pose a national security threat. The department could recommend tariffs of up to 25 percent.