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Goodbye, Saltillo?

by David Zatz on

FCA will lose its Mexican plants rather than repurpose them for export, if the U.S. goes to a highly protectionist trade policy, according to Sergio Marchionne.

The FCA chief executive said that the Ram Heavy Duty could be moved to Warren, once that plant is ready, if a ban or heavy tax on Mexican imports was put into place. Warren will not be ready for around two years.  Presumably, Hemi engines would be moved to an American plant as well.

The Jeep Compass is also made in Mexico, in Toluca, and there appear to be no contingency plans for it. The Compass is made in other parts of the world, for global sale. The ProMaster is also made in Mexico but is less important than the heavy duty pickups.

As Marchionne noted, president-elect Trump’s trade policy remains a matter of speculation. While Trump has talked a good deal about increasing the U.S. manufacturing base, he has not set forth any concrete policies, and several of his high-profile cabinet choices have been globalists who rely on trade with Mexico or China. Trump himself has preferred to import (mainly from China) instead, which also suggests that he is not planning a real trade war.

Still, Detroit has been taking any possible actions against Mexico seriously; since NAFTA, and even before, American automakers have grown to rely on Mexican manufacturing.

Canadian plants are likely in less danger. Responding to a question from CBC reporter Phillipe LeBlanc, Marchionne said, “To the best of my knowledge, there have been no tweets on Canadian production of cars. … It is my expectation that Canada will not be involved in this dispute, because I think the problem goes beyond cars. It has to do with the free flow of goods between Canada and the United States. You are Canadian. You would know enough of the history of lumber wars that we’ve had between Canada and the US, oil and gas exports out of Canada. I don’t think that’s the primary objective of the Trump administration, but I don’t know, so we’ll just have to wait and see. ”

FCA makes all its minivans in Canada, along with the Charger, Challenger, and 300C.

David Zatz founded Allpar in 1998 (based on a site he had begun in 1993-94), after years of writing reviews for retail trades. He has been quoted by the New York Times, the Daily Telegraph, the Detroit News, and USA Today. Before making Allpar a full-time career, he was a consultant in organizational psychology. You can reach him by using our contact form (much preferred) or by calling (313) 766-2304

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