Fiat Boss Seeks 'Clarity' on Trade -- WSJ

Auto executives say trying to roll back investments outside U.S. would hurt profits

By Chester Dawson and Mike Colias 

Auto makers pushed back against Donald Trump, denying his assertion that they are hurting U.S. employment with plants outside the country and warning that uncertainty over the president-elect's trade policies could wreak havoc on one of America's bedrock industries.

Executives gathered at Detroit's annual motor show Monday said trying to roll back investments outside America would ding profits and weaken their businesses. Mr. Trump made car makers a constant target in campaign speeches and a recent series of tweets, criticizing them for moving manufacturing jobs outside the U.S. and threatening high tariffs on cars made outside the country.

"We need clarity," Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne told reporters on Monday, noting it was hard to have a debate about trade over Twitter. "None of us have had a tweeting president before. It's a new way of communication, and we're going to have to learn how to respond."

Mr. Marchionne's comments came one day after Fiat Chrysler announced $1 billion worth of investments for two factories in the Midwest. Mr. Trump on Monday praised that decision. Mr. Marchionne later in the day said the timing of the announcement -- which came in the wake of Mr. Trump's criticism on Twitter of General Motors Co.'s and Toyota Motor Corp.'s Mexico plans -- was "coincidental with all these tweets coming out," and said the company hadn't been in contact with the incoming administration.

Ford last week scrapped plans for a new $1.6 billion assembly plant in Mexico, instead choosing to build small cars in an existing Mexican factory, and invest $700 million in a Michigan facility that will build electric vehicles.

The threats of high tariffs on cars manufactured outside the U.S. and brought into the country have sparked concern in the auto industry, which relies on lower-cost factories in Mexico for more than 10% of U.S. auto sales. GM last year became the first major auto maker to import vehicles from China: a Buick sport-utility vehicle. Detroit auto makers import a variety of vehicles from south of border, ranging from subcompact Ford Fiestas that yield little profits to high-margin Chevrolet Silverado or Ram pickup trucks.

GM's North America chief, Alan Batey, said Monday the industry has been unfairly singled out, and said it would be more appropriate for the incoming administration to target others, including electronics makers like Apple Inc., if restoring American jobs is a priority.

"I'm not sure we're the bad guys," Mr. Batey said. "I think there are a lot of other industries that probably over time will get into this discussion. I don't know, for example, how many iPhones are made in the U.S. for U.S. consumption."

Apple's iPhone is primarily made in China. Mr. Trump has criticized the Cupertino, Calif., tech giant's manufacturing policies in addition to barbs aimed at the auto industry and other U.S. manufacturing companies.

An Apple spokesman said the company has contributed to two million jobs in the U.S. across suppliers and developers, including 1.4 million among mobile-app developers, and said the company continues to increase the size of its U.S. workforce.

GM's Mr. Batey, like many of the executives presenting at the auto show, rattled off a list of statistics that support claims that reliance on Mexico is limited. GM, for instance, imported roughly 700,000 vehicles from three Mexican factories last year, but 70% of the parts used in them were made in the U.S., he said.

Mr. Batey said GM is eager to make its case to the incoming administration.

"I think there will be some surprise about the facts," he said. "When we sit down and show the complexity of our business, the lead time of our decision making, the jobs we've created, the facts around what is really happening, I think you're going to get a very very different picture."

Dieter Zetsche, the onetime head of Chrysler who now runs Germany's Daimler AG, told reporters to remember Mr. Trump's inauguration is still more than a week away. "All these 'what ifs' don't lead anywhere," he said.

Volkswagen AG executives said the company won't change its Mexico sourcing strategy. The German auto giant, currently negotiating the settlement of a U.S. criminal probe stemming from the company's admitted emissions cheating, is a "strong, invested, good corporate citizen in the United States," said Hinrich Woebcken, Volkswagen's North American chief. He pointed to $7 billion in planned U.S. investments and said the company employs 45,000 people in the U.S., when including dealers.

Write to Chester Dawson at [e-mail] and Mike Colias at [e-mail]

(END) Dow Jones Newswires

January 10, 2017 02:47 ET (07:47 GMT)

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