U.S. Incentivizes Domestic Automobile Production

Researched by Industrial Info Resources (Sugar Land, Texas)--As the second year of the Trump administration gets underway, it is evident that his policies on manufacturing products in the U.S. for domestic sales have spurred the automotive industry to take notice, especially as President Donald Trump specifically targeted automobile manufacturing while a candidate and again as president-elect. Now that he is president and has managed to enact the tax reform overhaul measures he promised during his campaign, there is even more incentive for the automakers to invest in U.S. manufacturing operations.

Recently, there has been some developments that would seem to bear this out. Fiat Chrysler Automobiles NV (NYSE:FCAU) (London, England) since 2016 has been in the midst of a $3.5 billion modernization effort at several of its plants in the U.S. to update the production capacity in support of next-generation products, such as the new Jeep Wrangler at the Toledo (Ohio) Assembly Complex North Plant, the new RAM 1500 truck at the Sterling Heights (Michigan) Assembly Plant, the Jeep Wagoneer Grand Wagoneer at the Warren (Michigan) Assembly Plant, and the new Jeep Pickup Truck at the Toledo Assembly Complex South Plant.

The company also recently completed a retooling of the Belvidere (Illinois) Assembly Plant to accommodate production of the Jeep Cherokee. Earlier this year, Fiat Chrysler announced that it will invest $1 billion to relocate production of the next-generation RAM heavy duty truck from the Saltillo (Mexico) Truck Assembly Plant to the Warren Assembly Plant. This move alone will result in an increase of 2,500 jobs at the Warren facility by 2020, when the new truck is scheduled to begin production.

Another recent development is the announcement of a new $1.6 billion manufacturing plant to be constructed in Huntsville, Alabama, as a joint venture between Toyota Motor Corporation (NYSE:TM) (Toyota, Japan) and Mazda Motor Corporation (Fuchu, Japan). The facility will be built on a 2,000-acre site and will produce approximately 300,000 Toyota Corollas and Mazda crossover SUVs annually, and employ some 4,000 workers when it reaches full production in 2021. This plant has been in the works for some time, but it can be argued that Trump's position on manufacturing products for the U.S. market in this country may have helped the decision-making process.

As these projects entail billions of dollars in investment, plus government regulations concerning zoning and environmental considerations, and in some cases negotiations with labor unions, it is evident that decisions to build new plants or retool existing ones in order to redistribute production are not taken lightly and are part of a well-thought-out process. However, there is another factor in any major project, and that is the prevailing political climate. With the threat of possible tariffs on imported vehicles and the added inducement of the tax reform measures, it would seem that there will be more automotive manufacturing companies that will strongly consider upgrades and expansions to their facilities in the coming year.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.