There he goes again. On Thursday morning, President-elect Donald Trump deployed social media to register some unkind words regarding Toyota. In just under 140 characters, the incoming President sent the car manufacturer’s stock tumbling and is also credited with devaluing Mexico’s currency.
However, Toyota’s response indicates that if the incoming President intended to stop its plans for a new manufacturing facility in Mexico, he will come up short of that goal.
As reported by Reuters, the Twitter-fueled episode started with this note:
“Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said in a post on Twitter.
Reuters and many others have already pointed out several key errors in this latest missive on the issue of overseas manufacturing.
In particular, Toyota already has a plant in Baja, which produces pickup trucks. The target of Trump’s threat was apparently a new plant about 1,000 miles away, in Guanajuato.
According to Reuters, the new Guanajuato plant will not eliminate jobs in the U.S., at least not directly. The new facility represents a shift in production from Canada to Mexico.
Another error has to do with the timeline. Construction has already begun on the new plant. The “no way” comment indicates that Trump was unaware of that fact, though perhaps he meant that Toyota should not continue.
In any event, Toyota plans to forge ahead, at least for now.
The company responded to the tweet without mentioning it, preferring to emphasize its 60-year history in the U.S.:
With more than $21.9 billion direct investment in the U.S., 10 manufacturing facilities, 1,500 dealerships and 136,000 employees, Toyota looks forward to collaborating with the Trump Administration to serve in the best interests of consumers and the automotive industry.
Toyota covered quite a bit of ground in a rather brief press release. The missive details the extent of Toyota’s recent activities in the U.S.:
Over the past 20 years, $2 out of every $3 invested in North America has been spent on U. S. facilities
Toyota was the smallest importer of vehicles from Mexico to the U.S. in 2016.
In 2015, Toyota exported more than 160,000 U.S.-built vehicles to 40 countries, helping to establish the U.S. as a global export hub.
The press release also gently took Trump to task for being unaware of the interplay between Toyota’s activities in the U.S. and Mexico:
Our manufacturing facilities in Baja, Mexico, established in 2002, support production at our San Antonio, Texas plant, where 3,300 team members produced over 230,000 Tundras and Tacomas in 2016.
Toyota closed off by noting that its recent U.S. manufacturing expansions include Kentucky, Alabama, West Virginia and Indiana. All four states went to Trump for President, with three of them (Kentucky, Alabama and West Virginia) registering wide margins of victory.
Based on Trump’s Twitter-enabled economic policymaking to date, it is likely that if Toyota makes any other plans to expand in the U.S., the President-elect will take full credit for that.
Meanwhile, new manufacturing jobs are being created in the U.S., but many of them are going to robots.
Trump’s proclaimed victory regarding jobs at the Carrier plant in Indiana, for example, resulted in a taxpayer bailout that will finance an automation upgrade for the facility.
Whirlpool provides a good example of the automation/jobs dynamic in action. Several years ago the company acquired Maytag and sent thousands of jobs to Mexico. Now the company is bringing manufacturing jobs back to the U.S. at up-to-date facilities, though in much smaller numbers.
On closer examination that was not quite accurate, but earlier this week Trump took credit for another Ford move, when the company announced that it was ditching plans for a new facility in Mexico.
As Bloomberg reports, that’s not quite accurate, either:
Ford says Trump’s criticism of the auto industry moving jobs abroad wasn’t the motivation for its change of plans, citing instead a drop in demand for the small cars it planned to build in Mexico.
The new plan is to invest $700 million in its Flat Rock, Michigan plant. Under a conventional manufacturing scenario, that would result in several thousand jobs. However, the company anticipates only 700 jobs.
Ford announced the upgrade as part of a companywide overhaul that will leverage electric vehicle technology. That brings us to the main factors that underpin the ability of U.S. auto manufacturers to continue creating jobs under the Trump Administration.
First, of course, is the auto industry bailout championed by President Obama, which is widely credited with saving GM and Chrysler from bankruptcy.
Ford famously turned down that offer, but it did receive a $5.9 billion federal loan in 2009, which enabled it to upgrade facilities in five states as part of the Obama Administration’s plans to promote advanced manufacturing in the U.S.
It’s a good bet that the $700 million Flat Rock investment will result in a state-of-the-art facility with all the bells and whistles.
If you’re thinking along the same lines, run right out and buy yourself a cigar.
The new Flat Rock investment still has to pass muster with local planning authorities, but if all goes well Ford will create a Manufacturing Innovation Center at the facility.
Ford’s current activities hint at some of the processes that could go on there, including 3-D printing, computer modeling and simulation, and of course, robotics.
All of these areas have been promoted by the Obama Administration through the Energy Department’s advanced manufacturing initiatives. These high tech positions are the true manufacturing opportunity of the future.
U.S. Manufacturing Jobs: #ThanksObama
In announcing the Flat Rock upgrade, CEO Bill Ford acknowledged the potential for favorable policies under the incoming Trump Administration. However, he also went out of his way to acknowledge the growth that has already occurred during the economic recovery (anybody remember the crash of ’08 anymore?) under the Obama Administration.
In fact, the 700 new Flat Rock jobs are a drop in the Ford bucket.
Here’s the money quote from Bill Ford, who spoke with both Trump and incoming Vice President Mike Pence about the new investment (cited by the Detroit Free Press):
“They were very pleased that we were investing here in the United States and actually adding 700 jobs on top of the 28,000 that we’ve added over the last five years,” Fields said.
Photo: by Tina Casey.