Two days before becoming president, Donald Trump tweeted that GM, Ford, Lockheed Martin and others announced investments and job creation in the U.S. “because of me!” But industry experts and company officials say the recent moves were largely market-driven and were in the works before Trump was elected.
To be sure, CEOs at the companies Trump listed — all of whom have met personally with Trump since his election — have said they are encouraged by Trump’s promises to cut regulations and lower corporate taxes, moves they said that will allow them to grow.
But are the flurry of recent corporate announcements about investments and job creation in the U.S. symptomatic of the Trump effect? The answer is more complex than Trump’s tweets suggest. Many of the company announcements tweeted by Trump — especially those from GM and Ford — fit a years-long trend.
All that has changed, experts said, is the way the plans are being publicized.
Trump’s comment came in response to a report on NBC’s “Today Show” in which correspondent Ari Melber concluded that Trump’s impact on new investments and job creation in the U.S. announced recently by several companies has been “very small or nonexistent.”
That drew the ire of Trump, who called the network “totally biased” and failing.
Totally biased @NBCNews went out of its way to say that the big announcement from Ford, G.M., Lockheed & others that jobs are coming back…
— Donald J. Trump (@realDonaldTrump) January 18, 2017
to the U.S., but had nothing to do with TRUMP, is more FAKE NEWS. Ask top CEO's of those companies for real facts. Came back because of me!
— Donald J. Trump (@realDonaldTrump) January 18, 2017
Several auto industry experts we spoke to said the announcements by GM and Ford were in the works before Trump was elected, and were largely market-driven decisions that fit a yearslong trend in the industry. Indeed, car companies have been announcing such deals — many of them bigger — for years. As for Lockheed Martin, the jobs aren’t “coming back,” they are being added as part of a larger contract for more F-35 planes.
Ford Motor Co. has been in Trump’s crosshairs since the early days of his presidential campaign when he criticized the automaker for its April 2015 announcement of a $2.5 billion plan to build two new plants in Mexico and expand a third. Trump repeatedly criticized that plan on the campaign trail, vowing that he would threaten to put a 35 percent import tax on Ford unless it moved the plants to the United States. Trump later took credit for pressuring Ford to change its plans and build a new “massive plant” in Ohio. (It turned out Ford had not changed its plans at all.)
On Jan. 3, Ford announced that it was cancelling its plan to build a different $1.6 billion plant in Mexico, and that it planned to invest $4.5 billion over the next five years to ramp up production of electric cars, including an investment of $700 million at its plant in Flat Rock in Michigan to manufacture two of them.
Trump promptly tweeted his praise for the move:
Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow
— Donald J. Trump (@realDonaldTrump) January 4, 2017
Was Trump responsible for it? In his Jan. 18 tweet, Trump says he was. “Ask the CEOs,” Trump wrote.
Ford CEO Mark Fields lauded Trump’s promise to cut business taxes and reduce regulations as good for Ford’s long-term success, but he said the recently announced changes were market-based.
The decision not to build the plant in Mexico, where Ford had planned to build the next generation Ford Focus, was scrapped because “we’ve seen decreasing demand here in North America for small cars, and we simply don’t need the capacity anymore,” Fields said on Fox Business News. Instead, he said, Ford will build it in an existing facility in Mexico.
As for the investment in electric vehicles, Fields said in announcing the plan that it was a reaction to the reality that “the era of electric vehicles is dawning,” adding that he expected to see production of electric cars exceed traditional gas-powered ones in the next 15 years.
Host Neil Cavuto asked if any of the decisions were based on Trump’s criticisms during the campaign.
“Well, we’re doing this based on what’s right for our business,” Fields said. Fields added that Ford is anticipating “more positive U.S. manufacturing business environment under Trump,” and he said the company welcomes some of the “pro-growth policies” such as regulation and business tax reform that Trump talked about during the campaign. Fields said Ford’s announcement was a “vote of confidence” that he’ll deliver on these things.
Fields noted that the 700 new jobs were in addition to the 28,000 the company has added over the last five years. The company has also invested $12 billion in U.S. plants over the same period.
“Would you have done this [the moves announced] if Donald Trump were not elected president?” Cavuto asked.
“Yes, absolutely,” Fields said.
On Jan. 3, Trump took aim at General Motors, calling out the company for moving production of its Chevy Cruze model to Mexico:
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
GM responded that Chevrolet Cruze sedans sold in the U.S. are made in Ohio. The company builds the Cruze hatchbacks in Mexico, but the company said only a small number of them are sold in the U.S. In November, CNN reported, GM sold about 16,400 Cruzes in the U.S., and that about 1,600 of them were Mexican-made hatchbacks.
On Jan. 17, GM announced that it was investing $1 billion in U.S. manufacturing operations, resulting in 1,500 “new and retained” jobs.
GM also announced that it would be moving work on axle production for pickup trucks from Mexico to Michigan, creating 450 jobs. And the company said it would be insourcing more than 6,000 IT jobs that were formerly outside the U.S., according to GM Chairman and CEO Mary Barra. Together with “streamlining our engineering operations from seven to three, with the core engineering center being in Warren, Michigan, and building on our momentum at GM Financial and in advanced technologies,” she said, “these moves, and others, are expected to result in more than 5,000 new jobs in the U.S. over the next few years.”
Trump again added some Twitter praise.
Thank you to General Motors and Walmart for starting the big jobs push back into the U.S.!
— Donald J. Trump (@realDonaldTrump) January 17, 2017
But GM leaders stressed that the investments in the U.S. were part of a longtime trend. The company noted that it has announced investments of $2.9 billion in the U.S. in 2016 — and more than $21 billion since 2009.
The insourcing of IT jobs, in particular, has been part of an ongoing strategy. The company’s press release states:
GM press release, Jan. 17: GM’s announcement is part of the company’s increased focus on overall efficiency over the last four years. With a strategy to streamline and simplify its operations and grow its business, GM has created 25,000 jobs in the U.S. − approximately 19,000 engineering, IT and professional jobs and 6,000 hourly manufacturing jobs – and added nearly $3 billion in annual wages and benefits to the U.S. economy over that period. At the same time, GM reduced more than 15,000 positions outside the U.S., bringing most of those jobs to America. During that period, the company moved from 90 percent of its IT work being outsourced to an insourced U.S.-based model.
At an auto industry conference on Jan. 10, Barra — who will serve on an economic advisory team for the Trump administration — said auto industry decisions have a “long lead. Decisions of products that we are launching right now were made two, three, four years ago.” She boasted that “over the last two years we’ve invested $11 billion in the United States” and brought 11,000 IT jobs to the U.S.
While not giving credit to Trump for the company’s decisions, she said she did expected some “tailwind” from Trump’s proposed regulatory and tax changes, which she said would allow General Motors “to grow and even increase jobs.”
On Dec. 22, 2016, Trump dropped the Twitter hammer on Lockheed Martin, maker of the controversial F-35 military planes that have long been beset by delays and cost overruns.
Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!
— Donald J. Trump (@realDonaldTrump) December 22, 2016
After meeting with Trump on Jan. 13, company CEO Marillyn Hewson said she told Trump “we are close to a deal on a new contract that reduces the price for the next 90 aircraft significantly.” She also announced that the deal would add 1,800 new jobs at the company’s Fort Worth, Texas, facility.
But it’s unclear how Trump can claim that the additional jobs “came back because of me.” As the New York Times reported, the “government’s next contract in the F-35 project would cover 90 planes, compared with 57 in the previous batch. The increase was in the works before Mr. Trump was elected, and other Lockheed officials said the added positions would come as production increases.”
In other words, Trump can claim credit for helping to drive down the cost of the program — though the Times noted the cost had been dropping even before Trump weighed in — but the additional jobs announced by Lockheed are tied to increased production of F-35s called for in the new government contract.
What the Experts Say
Michelle Krebs, a Detroit-based senior analyst for Autotrader who has been writing about the automotive industry for 35 years, told us few of the automakers’ announcements were a surprise to her or anyone else who covers the industry.
“The overall big picture, most of these things were in the works,” Krebs said, adding that perhaps some things have been added on the “fringe” because of Trump.
Ford’s decision not to build the new plant in Mexico appears to be a cost-saving measure due to slow sales of small cars, she said. As for the investments announced by Ford, GM and other car manufacturers, most of those have been in the works for months, if not years — many of them the result of negotiations with the autoworkers’ union in 2015.
GM, for example, announced in 2015 that it planned to invest $8.3 billion in the U.S. over a four-year period while adding 3,300 jobs as part of its negotiations with the United Auto Workers, the Detroit Free Press reported.
“Today’s announcement continues GM investments that have emerged as a result of the 2015 national bargaining agreement,” UAW Vice President Cindy Estrada said in a statement on Jan. 17.
Said Krebs: “It takes roughly four years to develop a new product. These decisions were not made in the last couple months. These companies don’t make billion-dollar decisions a month out.”
What has changed, she said, is the messaging. There appears to be an effort by carmakers to stay on the good side of Trump’s tweet storms, she said.
Bruce Belzowski, managing director of Automotive Futures group at the University of Michigan Transportation Research Institute, told us Trump and the automakers appear to be using each other for public relations purposes.
“They [jobs] didn’t come back because of him [Trump],” Belzowski said.
Most of the auto manufacturing investments have been in the works before Trump was elected, he said, but there is an incentive to announcing them now that extends beyond staying on the good side of the incoming president.
“He’s a pretty good PR machine for them,” Belzowski said. And for Trump, he said, it gives the inflated impression that he is affecting significant change.
Belzowski thinks car companies are “taking advantage of” Trump’s platform and “playing up to him. … And he seems to want to be played up to.”
The new investments by car companies in the U.S. have been happening for years, since early in the Obama administration, he said. They just didn’t get the same kind of media attention.
Indeed, the Center for Automotive Research found that automakers have announced investments of $116.5 billion since January 2009, said Kristin Dziczek, an analyst at the Center for Automotive Research in Ann Arbor, Michigan. And 73 percent of that investment has come to the U.S., while Mexico has gotten 21 percent and Canada, 6 percent.
In other words, these recent investment announcements are the latest in a yearslong trend.
Dziczek warned not to assign too much influence to Trump.
“Investments in the automotive industry do not move in the space of a few weeks,” Dziczek said. “Often, it is months, if not years, in the making.”
Forecasting firm LMC Automotive released a study on Jan. 18 that forecasts car companies will continue to increase their share of production in Mexico. The recent announcements about jobs in the U.S. may appear to be due to Trump, but are largely market-driven and were planned before Trump won the election, the report states.
LMC Automotive, Jan. 18: There have been several recent announcements of investment in U.S. operations or the cancelations [sic] of investment in Mexico by OEMs (Original Equipment Manufacturers). This appears to be the direct result of pressure from Trump holding to his campaign promise of penalizing companies for manufacturing outside the U.S. However, many of these decisions were already planned or were altered due to other factors, such as lower demand for small vehicles or shifting higher margin or complex vehicles to the US, and not solely the result of the pressure.
Nonetheless, the authors expect such announcements to continue. “We expect manufacturers to continue to publicly announce investment plans in the US even if they are not directly linked to the election,” the report states.
Maryann Keller, an independent auto industry consultant at Maryann Keller & Associates, chalked up the moves by automakers as “the normal course of business.”
“All they’re doing is announcing investments that they would have made anyway,” she told Bloomberg.
Again, corporate officials at all of the companies Trump listed praised Trump’s plans as business-friendly — specifically his promises to reduce regulations and cut corporate taxes. Those may well allow companies to grow in the future — time will tell. But as for the recent spate of announcements made by these companies, experts and officials from the companies themselves warn not to assign too much credit to Trump.