The CEOs of Detroit’s automakers are accustomed to sitting in the driver’s seat.
They won’t be Tuesday when they meet President Donald Trump for breakfast at the White House. He wants to know “how we can work together to bring more jobs back to the industry,” his spokesman, Sean Spicer, said.
It’s not that easy, even if the likes of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV made it look that way with the separate jobs-creating announcements each unspooled between Election Day and the president’s inauguration last week.
GM’s Mary Barra, Ford’s Mark Fields and FCA’s Sergio Marchionne will arrive knowing the president already has used Twitter to bash their investments in Mexico before claiming credit for their recent U.S. jobs announcements. Those had been years — not three weeks — in the making.
They know that the Center for Automotive Research in Ann Arbor estimates the industry could lose 31,000 jobs in the United States if the Trump administration moves ahead with plans to scuttle, or substantially renegotiate, the North American Free Trade Agreement blamed for killing thousands of U.S. manufacturing jobs.
That trade pact, signed into law by President Clinton, shaped a generation of auto investment, Wall Street expectations and labor-management relations. Unwinding it would have major implications for many suppliers and all automakers operating in the region, not just GM, Ford and FCA.
The auto CEOs also know that repatriating jobs and redirecting future investment to the United States from Mexico or Canada likely would increase costs that would need to be offset elsewhere, be it through corporate tax cuts, regulatory reform or eased federal fuel economy rules.
But money is fungible. That’s one reason Dow Chemical Co. CEO Andrew Liveris, following Trump’s Monday meeting with business leaders, predicted the president’s efforts to bolster manufacturing job growth would not undercut the sector’s global competitiveness: savings, in theory, would come from elsewhere.
We’ll see whether that actually turns out to be true. Or whether industry is playing upbeat because its leaders already have concluded there’s no upside to challenging a president willing to use social media for public shaming. He’s president, and automakers have to “adjust,” as several CEOs said at the Detroit auto show.
The politics practiced by Trump are the new reality, a Democratic-leaning trade skepticism counterbalanced by Republican-minded business-friendliness toward hard financial truths. They combine his “America First” bias and a willingness to project it (see his Twitter feed) with a longtime CEO’s understanding that there is more than one way to achieve competitiveness in a global industry.
The Detroit CEOs are well aware the new president is keenly interested in re-energizing American manufacturing in America for Americans. They also know publicly confirmed talks with Trump can reap them their own political reward, should commitments to add U.S. jobs be exchanged for presidential commitments to cut corporate tax rates and reduce costly regulations.
Make no mistake: adding jobs and pumping new capital into American sites pay political dividends for automakers and the executives who lead them — even if investors will want evidence the moves will not undercut the new level of competitiveness forged from the industry’s near-collapse eight years ago.
In the end, it all comes down to dollars and cents. Details of any revisions to NAFTA, or efforts “to bring more jobs back,” could have profound effects on the costs, profit margins and employment levels at all three automakers — and not all of it good.
A ranking industry executive called the talks “extremely positive,” especially the fact that a new president is focusing his attention on policy changes to bolster U.S. manufacturing. The challenge comes in the details and how much the big picture impacts the status quo.
The trick is ensuring it doesn’t. Not with investors and customers, employees and the United Auto Workers. The political byproduct of Trump’s attention to manufacturing is the disproportionate benefit it delivers to the industrial Midwest, long considered a “Blue Wall” that historically backed Democrats.
Until last November, that is, when Michigan and Ohio, Pennsylvania and Wisconsin, delivered Trump an Electoral College win few predicted. In theory, presidential attention to bedrock manufacturing concerns could be an economic win with political upside for the president, his party and the heartland.
Few states have a greater interest in those efforts than Michigan. The hub of the North American auto industry and a cornerstone of the industrial Midwest has dramatically improved its competitiveness since the end of the Great Recession.
Undermining that position would be foolish for a new president. He owes his job to many of the same people whose hometown industry is getting loads of White House attention because it really matters, still.
Follow Daniel Howes on Twitter @DanielHowes_TDN .