TAYLOR, MI -- Executives for the Ford Motor Company, General Motors and Fiat Chrysler Automobiles said President Donald Trump’s new North American trade treaty is a critical piece of legislation for the Michigan auto industry.
A panel of auto manufacturing leaders convened at Motor City Solutions in Taylor for a discussion on the United States-Mexico-Canada Agreement, a renegotiated deal that would replace the 1994 North American Free Trade Agreement. Representatives of America’s largest auto manufacturers urged Congress to swiftly ratify the agreement.
The panel convened before Vice President Mike Pence was scheduled to give public remarks on the USMCA in Taylor. All three companies announced billions of Michigan investment during the last few months.
Panelists highlighted the impact of the auto industry on Michigan’s economy, being responsible for 19 percent of the state’s gross domestic product, and said a new trade deal is needed to keep American manufacturers competitive in the global marketplace.
The new trade deal played a “key role” in Fiat Chrysler Automobiles’ recent decision to invest $4.5 billion in Michigan, said Head of NAFTA Purchasing and Supply Chain Scott Thiele.
Earlier this year, FCA announced plans to build next-generation three row Jeep SUVs in Southeast Michigan. It would add 6,500 jobs by converting engine plants into a new assembly plants, retool another assembly plant and make new investments in three other plants in Warren and Sterling Heights.
How and where vehicles and vehicle components are manufactured was a key component of trade negotiations between the U.S. and its neighbors. The USMCA added more stringent “rules of origin” requirements to ensure vehicles are built in North America.
Thiele said the rules of origin requirements was a “critical enabler” to invest in Michigan.
The USMCA would require automobiles to have 75% of its components manufactured in one of the three countries to avoid tariffs, up from 62.5% under NAFTA.
The new deal also requires 70% of all steel, aluminum and glass used in the production to originate in North America. If ratified by Congress, the USMCA would require 40% to 45% of parts to be made by workers who earn at least $16 an hour.
Ford Vice President Lisa Drake said fair trade agreements allow the company to grow. Ford is the largest American vehicle producer and the largest exporter of vehicles produced in the U.S., but Drake said the global market is becoming more competitive and technologically advanced.
Trump and leaders of Canada and Mexico signed the free trade agreement in 2018, but each country’s legislature must ratify the agreement.
House Speaker Nancy Pelosi, D-Calif., indicated earlier this month that the House will not consider the new trade deal without tighter enforcement provisions.
Representatives from the American Federation of Labor and Congress of Industrial Organizations criticized the deal after Trump signed it last year, calling it a “rebranded corporate handout.” Any progress made by the deal is “meaningless” without unenforceable standards to protect American jobs.
If NAFTA is not replaced, Drake said, there would be an “unspeakable impact” on American auto jobs.
“Ford is here to support Vice President Mike Pence and the administration in, hopefully, a very swift passage of this legislation in Congress,” Drake said.
Trump has been highly critical of NAFTA, blaming it for incentivizing corporations to offshore production facilities to Mexico at the cost of millions of American factory jobs. Re-negotiating NAFTA was among Trump’s top campaign promises in 2016 and featured heavily in his message to Michigan.
The U.S. International Trade Commission found the USMCA would have an overall positive impact on trade, GDP and employment, according to an April 18 report.
The commission estimates that USMCA would add 176,000 jobs and increase American exports to Canada and Mexico by 6 percent and 6.7 percent, respectively.
Production of automotive parts and employment in the automotive sector is expected to increase under the USMCA, according to the report.
General Motors Vice President of Global Public Policy Everett Eissenstat said the transition from internal combustion engines to electric vehicles represents a “critical time for the U.S. auto industry.”
GM announced plans to invest $300 million and add 400 jobs at its Orion Township assembly plant to produce new Chevrolet electric vehicles.
Ford plans to spend $900 million on Michigan plants during the next four years. The company expects to create 900 jobs.
Ford’s Flat Rock Assembly Plant will see an $850 million investment by 2023 while adding a second shift. New positions will focus on the making of the automaker’s first autonomous vehicle by 2021.
The company also plans to spend $50 million to create an autonomous manufacturing center in the region.
The vice president toured a Ford Motor Company truck production plant in Dearborn before traveling to Motor City Solutions in Taylor for an event with auto industry executives.
Hours before Pence landed in Michigan, he highlighted Ford Motor Co.'s Dearborn truck plant in an op-ed published by The Detroit News. Pence said the Michigan plant produced “some of the most iconic American brands in history.”