Sergio Marchionne said at the Detroit auto show that the president-elects tariff threats could construct manufacturing in Mexico uneconomical
The chief executive of automobile giant Fiat Chrysler has warned that the company would have to consider closing its Mexican mills if Donald Trump decides to impose his threat of tough new tariffs on imports from Mexico.
Sergio Marchionne, chief executive officer of Fiat Chrysler Automobiles, said on Monday that the entire industry was dogged by uncertainty since Trumps election and added that if the president-elect followed through on threats to tax Mexican car imports, he would have to consider shutting factories.
Its possible that if the economic tariffs that are imposed by the US administration on anything that comes into the United States, if they are sufficiently large, it will construct the production of anything in Mexico uneconomical and therefore we will have to move on. It is quite possible, Marchionne told addressing reporters at the North American International Auto Show in Detroit.
Repurposing the Mexican factory would be costly and uncertain. Asked if he would consider investments in Mexico if he was offered substantial incentives by the Mexican government, Marchionne said it would be incredibly imprudent on our side to try and make commitments to that country.
A Mexican-US trade war over vehicles would have relatively limited impact on the US but would be terrible for Mexico. If its a rejection of international trade in a wider sense, the implications are much more severe, he said.
Scaling back by US car firms is already reaching Mexico. Julian Eaves, managing director of Preferred Compounding de Mxico, a US-owned maker of rubber compounds operating in central Mexico, told the Guardian that the economic cost could run into the hundreds of millions or billions of dollars over the next five years, if manufacturing, contracting and indirect chores fall short of current plans.
Marchionnes commentaries arrived shortly after Trump had praised Fiat Chrysler and Ford for announcing new investments in the US. Trump constructed US auto production a key part of his campaign and won in part with the backing of voters in countries with the largest percentage of autoworkers.
Last week Ford abandoned plans to build a $1.6 bn plant in Mexico and said it would invest $700 m in a Michigan plant. On Sunday, Fiat Chrysler announced a$ 1bn investment in plants in Ohio and Michigan to construct new SUVs and pickup trucks that will add 2,000 jobs.
Its ultimately happening Fiat Chrysler merely announced plans to invest$ 1BILLION in Michigan and Ohio plants, adding 2000 jobs. This after Ford said last week that it will expand in Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford& Fiat C! Trump positioned on Twitter.
Marchionne said he had not spoken to Trump or his advisers and that the decision has been in the works for a long time. Fiat Chrysler whose brands include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Maserati makes about 17% of its vehicles in Mexico, according to analysts.
He said it was difficult for the industry to manage under the current political surrounding. Trump has threatened to scrap the Northa American Free Trade Agreement( Nafta) between the US, Mexico and Canada, but so far the most detail he has given has been on Twitter.
I dont know if its a new political speech, but if it is well adjust to that too, said Marchionne.
On Sunday Mary Barra, CEO of General Motors and a Trump adviser, told GM would not be changing its sourcing decisions because of Trump. This is a long-lead business with highly capital-intensive investments decisions that were attained two, three and four years ago, Barra told reporters in Detroit.
The company also exposed it is planning to build a freshly unveiled vehicle, GMC Terrain, a crossover SUV, in San Luis Potos, Mexico.
Barras comments came after the Trump threatened the company with a big perimeter taxation for importing some of GMs Chevrolet Cruze compact cars from a plant in Mexico. The imported models account for some 5% of the Cruze automobiles sold in the US. The remainder are fabricated at its Ohio factory.
On Monday Barra touted GMs creation of US undertakings. We have more than 40 manufacturing facilities in the US and over the last two years alone, we have investment more than $11 bn generating thousands of new jobs in the US, as well as recruiting technological talent, Barra said unveiling new vehicles at the Detroit auto show.
Michelle Krebs, senior analyst with Autotrader, said the US car firms were reeling from the uncertainty Trump has created. It takes four years to develop a vehicle, longer still to build a plant, she told. This is an industry that needs clarity.
Read more: www.theguardian.com