Pence Pushes for Approval of New Trade Agreement in Detroit-Area Visit

Date: April 25, 2019
Source: Detroit News
MEMA Industry News Editor’s Note: MEMA and one of its four divisions, the Original Equipment Suppliers Association (OESA), hosted a senior-level automotive panel discussion on April 24, as part of the event detailed in the article below that engaged Vice President Mike Pence on important issues related to the proposed United States-Mexico-Canada Agreement (USMCA). The supplier industry has been unified in its argument that a strong North American trade deal and a stable supply chain are essential to allow U.S. businesses to remain competitive in a global marketplace. More details about MEMA’s role in the April 24 event are available here.
 
TAYLOR -- U.S. Vice President Mike Pence’s visit to Michigan on April 24 kicks off a nationwide tour to urge swift approval of the proposed United States-Mexico-Canada Agreement.
 
“When the American automotive industry prospers, America prospers,” Pence said during a speech at Motor City Solutions in Taylor. The vice president asked Michigan and the automotive industry to take the lead in pressuring its elected representatives to pass the USMCA “this year.”
 
Ahead of Pence’s remarks, auto industry leaders spoke in support of the trade agreement designed to replace the North American Free Trade Agreement. But the automakers and suppliers are still feeling the pinch of costs related to steel and aluminum tariffs, with Fiat Chrysler Automobiles’ head of NAFTA purchasing and supply chain calling for a path to remove tariffs as part of the push to approve the new trade deal.
 
“Our priority now is to have Congress approve the USMCA,” Pence told reporters following his speech. “Once we address the inequalities that existed under NAFTA... we’ll give due consideration to other tariffs that have been imposed. But the priority right now is to get USMCA approved by Congress and have Canada and Mexico approve it.”
 
Pence toured Ford Motor Co.’s Dearborn Truck Plant ahead of the speech. At the factory where Ford builds a truck every 53 seconds, he stopped at four points along the assembly line where truck bodies meet the chassis, an ergonomic station, and the location where the truck bed is secured to the chassis.
 
Then Pence drove a white 2019 F-150 off the line with plant manager Deborah Manzano, assistant plant manager Corey Williams and Ford president of automotive Joe Hinrichs riding in the passenger seats. He took photos with plant employees, and stopped frequently to hug them or shake their hands. Pence also briefly sat in a black 2019 F-150 Raptor while plant employees looked on.
 
“That’s your next truck right there,” Hinrichs said.
 
“I’m tellin’ you...” Pence replied.
 
Pence’s visit to Taylor and Dearborn is the Trump administration’s highest-profile trip to promote the proposed trade pact, which has garnered criticism from UAW leaders.
 
“As it stands now, the New NAFTA falls short,” UAW President Gary Jones said in a statement. “We need a strong, enforceable and impactful agreement that saves and creates good paying jobs right here at home. We urge the Administration to get back to the negotiating table with Canada and Mexico.”
 
Ahead of the vice president’s remarks in Taylor, auto industry leaders gathered to discuss the merits of the USMCA.
 
Executives from Ford, Fiat Chrysler and General Motors Co. expressed support for the USMCA, pointing to examples of U.S. manufacturing investments they say are in response to new requirements in the proposed trade agreement.
 
Most notably, Fiat Chrysler’s plan to invest $4.5 billion in five Michigan plants -- which includes reviving an idled engine plant in Detroit as a Jeep assembly plant -- hinges on passage of USMCA, said Scott Thiele, head of NAFTA purchasing and supply chain for the automaker.
 
As CEO Mary Barra stated last month, new requirements in USMCA spurred GM to reverse plans to build a new Chevrolet electric vehicle outside the U.S. and instead invest $300 million to build the car at its small car plant in Orion Township. Everett Eissenstat, vice president of global public policy for GM, reiterated that on April 24 and expressed a need for swift passage of the new trade agreement due to long product-development lead times.
 
Ford’s vice president of global powertrain and purchasing Lisa Drake said battery-supplier SK Innovation recently broke ground on a new plant in Atlanta in response to rules of origin requirements for batteries outlined in USMCA.
 
A study from the U.S. International Trade Commission found recently that U.S. automakers would sell 140,000 fewer vehicles per year under the USMCA. That finding contradict White House statements that a new trade deal would be a boon for automakers.
 
Ford, GM and Fiat Chrysler officials have said multiple times over the last few years that NAFTA needs to be modernized, updated or improved. At the same time, automakers are reckoning with high costs related to President Donald Trump’s tariffs on steel and aluminum, and a proposal to slap tariffs on imported vehicles and car parts.
 
Both Ford and GM say rising commodity costs in 2018 cost them around $1 billion. The unexpected hit spurred full-year earnings forecast adjustments from all three Detroit automakers. But Larry Kudlow, Trump’s assistant for economic policy and director of the National Economic Council, told The Detroit News in October that the automakers are “making money” despite hits from the tariffs.
 
USMCA calls for increasing the percentage of a vehicle’s parts that must originate from one of the three countries in the agreement to 75 percent from the current 62.5 percent to qualify for duty-free treatment. It also requires that 40-45 percent of an auto’s content be made by workers earning at least $16 per hour. Vehicles not meeting the requirements would be subject to a 2.5 percent duty.
 
The Trump administration has argued the hourly requirement is tantamount to a U.S. requirement because Mexico autoworkers make a fraction of the proposed salary requirement.
 
Photo: Vice President Mike Pence comes onto the stage with MEMA President and CEO Bill Long at the April 24 event in Taylor, Mich. (Daniel Mears, Detroit News)
Printer-friendly version