The 20th of January 2017 won’t soon be forgotten. It’s the day when an American businessman stood in the very heart of the American capital and proceeded to deride the Washington establishment, while – ostensibly – plagiarising from the speech of a Batman villain. Hollywood couldn’t have made this up!
The following day saw protest marches not just in the United States, but also around the globe. Whatever you think of The Donald – and I happen to think that the size of his hands match the size of his mind and heart, and that he’s a misogynistic, myopic, insular, bigoted, small minded excuse for a leader – the question is why does it matter so much to the rest of the world?
And, I suppose, the answer is that America isn’t just the self-proclaimed leader of the free world – it is, in fact, the ‘leader’ of the free world! It’s had an enormous influence over popular culture for the better part of the 20th century, and it scares us that the leader of the free world – and the man who controls the largest nuclear arsenal on the planet – was inspired by Gotham’s fiercest super-villain (as my seven-year old refers to him – Bane, not The Donald).
Well, the automotive industry is directly in his crosshairs – and I don’t think they can turn to Commissioner Gordon for help. But, to give credit where it’s due, can you really fault him (The Donald, not Bane) for attempting to save factory jobs in the US?
To achieve his stated goal, Trump has threatened to dissolve NAFTA (the North American Free Trade Agreement) and impose a tax of up to 35% on cars produced in Mexico and imported into the US. Needless to say, this would be disastrous for all the OEMs who have invested (and continue to invest) many billions of dollars in Mexico over the years – everyone from the VW Group, BMW, Nissan, Hyundai-Kia, Ford, Fiat-Chrysler and GM. All of them citing the many favourable trade agreements that Mexico has with the rest of the world – NAFTA, of course, being prime among them.
Shortly after a ‘Trump Twitter Tirade’ (I have a feeling that this alliteration could soon become a verb), Ford announced that it was scrapping plans for a $1.6 billion small-car plant planned in Mexico. But the Blue Oval was quick to point out that the reason for their change of heart was, in fact, reduced demand for small cars.
In 2016, Mexico produced almost 3.5 million cars – putting it in 7th place, just behind India, in the list of automotive manufacturing countries. Of this, 2.1 million were exported to the US. The US, incidentally, produces over 12 million – putting it in second place. China, by the way, produces more than twice that.
So, while Trump is well within his rights to try and protect US jobs, there are a couple of things to consider. The first being that increasing automation is probably a bigger threat to factory jobs in the US than off-shoring – so he’ll need to develop a strategy to enhance the skillset of US factory workers if he wants to ensure that they remain employable. Secondly, the auto industry is one of the main drivers of a country’s economy – and pretty much all the large OEMs produce cars in the US – so he may not want to turn the industry on its head and risk derailing growth in a market that saw record sales of over 17.5 million units in 2016. Thirdly, and while I’m no geo-political expert, he may not want to derail growth in Mexico either – considering they’re an immediate neighbour. Remember, he hasn’t built that wall as yet!