Global Motors: It’s Good For the Auto Business. Is It Still Good For America?

In 1953 newly elected President Dwight D. Eisenhower nominated GM CEO Charles “Engine Charlie” Wilson as secretary of defense. When asked during his confirmation hearings whether he could ever make a decision that would adversely affect his old employer, Wilson said he could but added he could not conceive of such a situation “because for years I thought what was good for our country was good for General Motors, and vice versa.”

Back in 1953, the auto industry marched lockstep with the national interest, and not just in the U.S. A homegrown auto industry was de rigueur for any country wanting to join the wealthy nations club. No more. In the 64 years since Engine Charlie’s controversial confirmation hearings (his reluctance to sell his GM stock, worth $22.6 million in today’s dollars, alarmed senators), the auto industry has gone global.

GM now makes and sells more Buicks in China than it does in the U.S. Toyotas are made in Texas, Hondas in Ohio, Mercedes-Benzes in Alabama, BMWs in South Carolina, and Volkswagens in Tennessee. And everyone is flocking to Mexico. An international web of suppliers makes components for them. Ford Motor Company became the most vertically integrated automaker on the planet by making every single piece of its cars in giant factories such as the legendary River Rouge plant near Detroit. It now has more than 100,000 different parts made by 1,200 major suppliers in 60 countries.

Chevy’s Bow Tie might still make America’s heart beat a little faster, and Germans might still regard Audi’s Vorsprung durch Technik more a statement of fact than an advertising tagline, but behind the softly echoing nationalism of badge and brand is a business model that spans the planet. This makes the anti-globalization sentiment that helped put Donald Trump in the White House a major headache for industry leaders.

Back in ’53, the industry marched lockstep with national interest.

The issue is not ideology. Make no mistake, automakers are run by pragmatic, hard-nosed business leaders who understand the need to work with politicians of all persuasions. No, what everyone from GM boss Mary Barra to Daimler’s Dieter Zetsche to Toyota scion Akio Toyoda is trying to figure out is how to convince President Trump that their globalized businesses are not a threat to America’s national interests.

Read about how Trump wants to tax imports from Mexico 20 percent to fund a wall on the U.S.’ southern border HERE.

Trump’s twitchy Twitter fingers have already called out Ford, GM, and Toyota for building cars in Mexico and then selling them in the U.S., implying it costs jobs in America. Ford’s Mark Fields subsequently announced that plans for a $1.6 billion investment in a new plant in Mexico to expand Focus production had been shelved in favor of a $700 million makeover of Flat Rock, Michigan, where he said the company would build a new generation of hybrid, electric, and autonomous vehicles. But Japan’s finance minister, Taro Aso, bluntly defended Toyota’s Mexico strategy. “It’s questionable whether the new U.S. president has a grasp of how many vehicles Toyota builds in the U.S.,” he told a reporter for Britain’s Financial Times.

Aso-san might have a point. Last year, Toyota built more than 1.3 million vehicles in the U.S., spread across 10 model lines and 14 manufacturing plants. It buys components made in 15 states, and, according to American Automobile Labeling Act figures, the Camry built in Georgetown, Kentucky, has more U.S.-made parts than a Ford F-150. True, the profits from Toyota’s U.S. operations go back to Japan. But Toyota says it has invested almost $22 billion in the U.S. over the past 59 years, has created 365,000 jobs, and plans to spend another $10 billion here in the next five years. And complaining about where the profits go is nonsense when GM shareholders are making a buck on Buicks built and sold in China.

One senior U.S. auto industry executive, speaking off the record at the Detroit auto show, said he believes once President Trump understands the complexity of today’s globalized auto industry and its real value to the U.S economy, the populist Twitter trash talk will go away. “We actually have more in common than differences,” he said, referencing Trump’s oft-stated desire to have a strong U.S. economy with less regulation and lower taxes—all stuff automakers love to hear from politicians.

Time will tell if he’s right.

More from Angus MacKenzie:

• The Unexpected Way Autonomous Tech Could Benefit The AMG E63
• Sacre Bleu! The French Are Coming!
• Rethinking the Auto Industry

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