Toyota waves US investment flag at Detroit auto show
Japan's biggest automaker responds to Trump's Twitter feed
KAZUYUKI OKUDAIRA and TOYOKI NAKANISHI, Nikkei staff writers
DETROIT, U.S. --Toyota Motor's president was among the automaker executives who felt compelled to tout U.S. investments at the auto show here, a sign that President-elect Donald Trump's attacks on the industry are prompting a strategic reassessment.
"The Camry has been the biggest volume seller in the U.S. for 15 years but we cannot be complacent," Akio Toyoda said Monday as he unveiled a fully redesigned version of the midsize sedan. "We will roll out products and make investments." He then went on to announce a $10 billion U.S. investment over the next five years.
Toyoda's Camry presentation had been long scheduled. But shortly before the trip, Trump butted in on Twitter, criticizing Japan's leading automaker for plans to build a new plant in Mexico. Trump similarly had assailed the Mexican production of Ford Motor and others, with Toyota becoming the latest target.
In light of Trump's twitter attack, Toyota's brass concluded that they could not go to the U.S. empty-handed.
The $10 billion in spending is not a big sum for Toyota. Already very active in the U.S. market, Toyota did not add any new projects to come up with the figure but announcing the investment was a way to show that it is already making a big contribution to the American economy.
Likewise, statements made by other auto executives here reflected Trump's outsize influence.
Ford CEO Mark Fields said Monday that Trump's policies will create a better environment for U.S. manufacturers, highlighting how investing in Michigan rather than Mexico is logical.
Trump had railed against Ford for its Mexico production, calling the company "shameless." The automaker likely decided that it would rather make concessions than continue to be singled out by Trump.
Fiat Chrysler Automobiles will invest $1 billion to bolster plants in the U.S. Midwest, including Michigan, and create 2,000 jobs. CEO Sergio Marchionne said the company adapts when the rules change, showing a flexibility to cope with the incoming administration.
Trump thanked Ford and Fiat Chrysler on Twitter Monday for their steps. He has yet to mention Toyota.
Automakers are not the only ones scrambling to appease Trump. Japanese technology powerhouse SoftBank Group got the ball rolling. CEO Masayoshi Son met with Trump Dec. 6 and promised to invest $50 billion and create 50,000 jobs in the U.S. over four years.
Alibaba Group Holding Chairman Jack Ma told Trump Monday in a meeting that the Chinese e-commerce giant will work to create 1 million jobs in America.
On Tuesday, tire maker Bridgestone said it will invest an additional $180 million in U.S. production facilities.
But Trump's methods could do big damage to U.S. automakers that have taken advantage of the North American Free Trade Agreement. Shifting production from low-cost Mexico to the U.S. would significantly erode their competitive edge.
Over the short term, such moves could boost U.S. employment. But over the long term, the companies' earnings would suffer, and this could hurt employment as a result.
In 2015, U.S. imports from Mexico came to $295 billion, according to the Office of the U.S. Trade Representative. The tally had soared more than sevenfold from 1993, before NAFTA took effect.
Mexico ships not only complete vehicles but also autoparts. So Mexican-made goods support U.S. manufacturing.
Detroit's big three carmakers accounted for 45% of the auto production in Mexico in 2016. Besides Japan's Nissan Motor, which rolled out Mexican production ahead of other carmakers, the Detroit Three are the biggest beneficiaries of the NAFTA arrangement. Ford, in particular, exports more than 90% of its Mexican output to the U.S.
This explains why the company has fought to defend Mexican production. As Trump began criticizing the car company's Mexican investments, last spring, Ford said repeatedly that the outlays would not reduce U.S. employment.
The company also sounded a note of caution about re-examining NAFTA, making the point that such a step would hurt the auto industry. Yet Trump kept threatening higher tariffs on vehicles built in Mexico, driving Ford to finally withdraw a Mexican investment plan.
Mexico's auto industry is not fully self-sufficient yet. Some materials have to be imported from the U.S. So the two countries' manufacturing industries enjoy a symbiotic relationship. If Trump continues his protectionist stance, the U.S. manufacturing sector could end up paying the price.