Trump and Detroit Three Auto CEOs Begin Cobbling New Future Today

GettyImages-538617741-compressorAmerica’s “Big Three” automotive CEOs remain at the vortex of the early days of the Trump presidency as they come away from a meeting scheduled with him today trying to sort out not only the signals they’re getting from him but also their own strategies in response.

In the meeting that was set for the four of them, General Motors CEO Mary Barra, Ford CEO Mark Fields and Fiat Chrysler CEO Sergio Marchionne likely heard President Trump repeat his now-familiar mantra about the importance of their keeping and adding to the automakers’ jobs in the United States—as well as his threat to slap a 35-percent tariff on their car imports from Mexico.

And they know that the Trump administration is just days away from tone-setting meetings with Canadian and Mexican officials that surely will involve demands for overhauling the North American Free Trade Agreement, a bedrock for how nearly every global automaker has built its supply and manufacturing network for the U.S. continent.

“Today’s action draws a line in the sand that hopefully is just the start of President Trump’s promised pro-worker, pro-income-growth agenda.

But in a broad and even specific sense, Marchionne, Fields and Barra were preparing for today’s meeting for months—ever since Election Day sent a clear signal to U.S. manufacturers and to the rest of the world that a President Trump would perceive that he has a mandate to pursue an “America First” agenda on jobs and trade.

In fact, as the Wall Street Journal reported, Fields said that he re-read Trump’s The Art of the Deal over the holidays just so he could get a better handle on the self-described ace negotiator across the table from him today.

Yet, if Fields and his peers at the Detroit Three automakers are still paying attention, they also might have seen the outlines for making their own deal with Trump already taking shape. In President Trump’s meeting with a broader group of CEOs on Monday, for example, he could be heard perhaps stepping back from the “35 percent tariff” on Mexican imports that was one of his campaign mantras.

“If you go to another country,” he warned yesterday’s group of business leaders, as it was widely reported, “we are going to be imposing a very major border tax.”

So what’s the general “very major” tax as compared with Trump’s previous specific “35 percent”? The difference could be very significant. And from their decades of hard-edged negotiations with suppliers and labor unions and governments and other constituencies, auto-company negotiators themselves have gotten pretty good at exploiting any such openings.

It also could be significant that President Trump isn’t content with just courting skeptical manufacturing CEOs to his point of view and agenda. In the wake of the nation’s formal withdrawal from the Trans-Pacific Partnership trade agreement yesterday, for instance, Leo Gerard, president of the United Steelworkers, could be heard endorsing the move—and, by implication, Trump’s overall nativist thrust.

“Today’s action draws a line in the sand that hopefully is just the start of President Trump’s promised pro-worker, pro-income-growth agenda,” Gerard said on Monday.

Meanwhile, Marchionne said in a public statement today, “I appreciate the President’s focus on making the U.S. a great place to do business. We look forward to working with President Trump and members of Congress to strengthen American manufacturing.” FCA US has committed investments of more than $9.6 billion in its U.S. manufacturing facilities and created 25,000 new jobs to date since 2009.

And as they all engage Trump in office and personally rather than pre-inauguration and via tweet, the Big Three CEOs also are getting a chance to find out what the new president might be willing to do to help the auto industry overall, rather than just keep them on edge about Mexico.

Trump promised big cuts in corporate-tax rates and federal regulations that afflict automakers. And based on his opposition to climate-change hysteria, Trump certainly should be open to easing the existing stiff, Obama-administration timelines for carmakers’ improvements in emissions and fuel economy.

There’s also the question of whether the current upticks in consumer and business confidence will continue this year, which could help U.S. auto sales extend their record-setting seven-year run for an eighth year.

“I tell [Toyota senior leadership] that we’ve got a pro-business administration in Washington now and that we need to anticipate that,” Mark Hogan the former U.S. automotive executive and current member of Toyota’s board, told Chief Executive recently.

A top U.S.-based auto-supplier executive put it another way this week. “He’s making his position known and then he will get around to the negotiating table,” Hogan said about Trump. “I’m sure there will be some discussion and some new levies.”

He continued, “there also will be a lot of numbers thrown around that show how well Pittsburgh and Detroit are doing these days. Let’s wait and see. We’ve got a manufacturing plant in Mexico and we sure as hell aren’t going to do anything about it.”

Let the bargaining begin.

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Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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