Fresh from the North American International Auto Show: 4 Ways Auto CEOs Are Responding to Trump Targeting

The North American International Auto Show has wrapped up in Detroit, but the event was chock full of reactions to president-elect Donald Trump’s latest tweet storm, as auto manufacturers continue to worry about being his next target. As the inauguration looms near, there are several lessons other CEOs can take away from how automotive-industry chiefs have been reacting as Trump tries to influence their decisions about production in Mexico. Here are 4 possible alternatives.

1. Throw him a bone as Ford CEO Mark Fields did when he decided not to build a new small-car plant in Mexico. Small-car sales are tanking, so he probably doesn’t need the $1.6-billion plant anyway. But Fields allowed Trump to gloat about Ford’s about-face even though, as a presidential candidate, the president-elect rhetorically beat up Ford every chance he got for its original decision to add the Mexico factory. Fields added to the kowtowing by saying that he thinks the new president might do good things for the U.S. auto industry.

2. Crusade for support. If nothing else, auto CEOs can’t risk the possibility that Trump actually could slap a huge tariff on Mexican automotive imports to the U.S.; their North American, nay, global supply chains are completely interconnected at this point, and such a penalty essentially would blow up the car industry as we know it.

Some CEOs laid it on thick at the NAIAS and elsewhere. For instance, General Motors CEO Mary Barra said it was important for the Trump administration to understand the automotive business, including its very complex supply chains, high capital investments and long leads on investment decisions.

“Decisions for products coming out this year were made two, three, four years ago,” she said. Then Barra ticked off a bunch of statistics about GM’s production, employment and commitment to the U.S. “We want to make sure that voice is heard as any policies are set.”

Also, moaned Fiat Chrysler CEO Sergio Marchionne to reporters, “I need clarity, we all need clarity.”

How internationally deep is your supply chain and what would be at stake for your company?

3. Tout your wins. A favorite parlor game lately in world automotive capitals has been to guess which auto company Trump might pick on next. At NAIAS, some CEOs attempted pre-emptive strikes by announcing new jobs at their facilities in the U.S. Ferrari CEO Sergio Marchionne, Volvo Cars CEO Hakan Samuelsson and Stefan Sommer, CEO of major industry supplier ZF Friederichshafen, are just two companies that made such announcements. Some actually repackaged old jobs announcements as news to fit the purpose.

4. Appreciate the bigger picture. Some automotive leaders sounded a much more sanguine tone about President-Elect Trump even though he keeps talking about imposing tariffs on Mexican imports. Here’s why: Donald Trump is a negotiator if he’s anything, and clearly he’s staking out a negotiating position so that he can get what he really wants from Mexico, which likely is some substantial improvements in NAFTA. He is a highly successful global businessman who surely knows what he’s doing more than the cognoscenti will acknowledge.

Conclusion
Overall, Trump already has been pretty good for the car business as a whole and likely is to be even better once he actually takes office. Nissan CEO Carlos Ghosn implied that Trump was responsible for the jump in American consumer confidence which, rather suddenly, has led auto chieftains like him to hope that 2017 actually could be better for U.S. sales than the record level in 2016.

Also consider the fact that Trump wants to cut corporate taxes, Ghosn said, and “all of this is going to go in the direction of boosting growth” and creating “great things for the industry.”

Similarly, Toyota board member Mark Hogan told Chief Executive that he’s optimistic. “I look forward to a more pro-business environment, including tax cuts and incentives for job creation,” Hogan said. Trump is “willing to work on rebuilding the U.S. manufacturing base so that we can become a pre-eminent exporter again.”