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President Trump pushes forward with a deal with Mexico so that it can be signed before the new Mexican administration of Lopez Obrador takes over. This means leaving Canada out and having a separate deal with Canada later on. Mr. Trump sees negative connotations in the term NAFTA and would like to call it the "United States - Mexico Trade Agreement." Terms for Canada to join the agreement would be tougher and the pressure on Canada to strike a separate deal was increased with Mr. Trump saying there could be tariffs on imported Canadian made cars. Mexico has accepted revisions to NAFTA that make it harder for Mexico to challenge U.S. trade penalties. Mr. Trump's negotiating position is based on his conviction that the eagerness of other nations to sell in the U.S. market gives the U.S. a lot of clout. Mr. Trump also faces pressure from within the Republican Party to show results not just by imposing tariffs and playing hardball on trade but to come up with new trade deals. Steps taken by Mr. Trump were to impose tariffs of 25% on imports of aluminium and steel, and 25% tariffs on a list of imports from China including solar panels. President Trump hopes to get support from Democrats by including provisions that support trade unions in Mexico and higher wages in Mexico. The provisions also require higher wage labor in the U.S. to build the required U.S. content and are designed to support American jobs and wages in the auto industry.   ...

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A decline in German manufacturing driven by the decline in its large auto sector. This in addition to Germany's large investments in China under Merkel and Chinese lockdowns will delay a post pandemic recovery, says this report in WSJ. Germany is now shifting its investments to the US as shown by the new investment in a VW Scout brand restarted in the US.

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The Federal Reserve reports show capacity utilization in the U.S. at 76.9% in April 2011. This is less than the 81% when the recession began in 2008. It shows an increase from the 67% capacity utilization in June 2009. The capacity utilization figures are 78.1% for the chemical industry, 80.5% for the computer and electronics industries, and 74% for the auto industry in March (which dropped temporarily to 63% in April as a result of the earthquake in Japan).

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Harris pragmatic approach and willingness to try new solutions applies to Michigan- to find ways to protect union jobs and make the transition to clean cars in a way that increases wages and jobs and creates a bright future for the auto industry. Letting other countries manufacture EV's would hand over the manufacturing technologies to say China and lead to a future collapse of the auto industry in Michigan. This is why there is a transition period which is flexible to 2030 or even 2034, and the curve is for more gains in EV sales in the latter years as prices come down and technology improves. At every step of the way business presents unique challenges, and FDR/Harris "persistent bold experimentation" is part of the answer as China's BYD has come up with a better cheaper in house battery that means it can export EV's at lower prices- the US can't as yet. Electric vehicles sales are plateauing in 2024 growing from 7.4% to 7.8%. The former president describes an EV mandate. No EV mandate for all cars to be electric exists. The action taken by president Biden is for all cars to meet greenhouse gas emission targets that would require 50 percent of cars to be electric vehicles by 2030. Michigan as the home of the auto industry is heavily influenced by the auto industry. Biden walked the picket line here last year to support a UAW strike for higher wages after decades of concessions by workers that reduced wages to near the poverty level for families.  Harris pragmatic approach and willingness to try new solutions applies to Michigan- to find ways to protect union jobs and make the transition to clean cars in a way that increases wages and jobs and creates a bright future for the auto industry. Letting other countries manufacture EV's would hand over the manufacturing technologies to say China and lead to a future collapse of the auto industry in Michigan. This is why there is a transition period which is flexible to 2030 or even 2034 an the curve is for more gains in EV sales in the latter years as prices come down and technology improves. At every step of the way business presents unique challenges and innovation is part of the answer as China's BYD has come up with a better in house battery that means it can export EV's- the US can't as yet. ...

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U.S. auto companies are steadily reducing the incentives that reduced profit margins for many years. Cash back offers of various kinds to subsidized leasing programs are being pared back steadily in a determined effort to raise profit margins by Ford Motor, GM and Chrysler. The average incentive was $2,124 per vehicle in October, which was 1.4% below the level the prior year, according to Edumnds.com. The increase in demand helps automakers. The annualized rate for sales in 2012 was 14.4 million. The figures for incentives by automaker released by Edmunds.com show GM with the highest figure of $3037 per vehicle in incentives for October 2012, followed by Ford Motor at $2788, and Chrysler at $2683. The gap between U.S. car makers and the Japanese has narrowed, with Toyota at $1621 and Honda at $1420 per vehicle in incentives for Oct. 2012.

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Public sentiment shifts sharply against free trade in the March 2016 Michigan primary for the U.S. presidential election, with candidates saying trade agreements do not take into account the interests of American manufacturing workers making large gains. Between 1999 and 2010 public sentiment shifted against trade agreements for all age, education and income groups. A study by Autor, Hanson and Dorn showed loss of 5.6 million jobs in the last decade and large trade deficits, and demonstrated the effect by counties in the U.S. most hurt by trade policies.

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Such realism is needed today to listen to all so that climate change action on auto carbon emission can be de-politicized and realistic plan can be adopted. Too many floods, fires and adverse events by 2024 for the US not to have a plan and deny climate change does not exist. The Biden administration gives flexibility to automakers to meet auto carbon emissions rules by 2032 by accelerating the progress in the last 3 years as the capital investments, research and learning curve for new technologies, manufacturing improvements and cost reduction, and charging station infrastructure enlargement have taken place by 2030. Biden administration officials clearly understand resistance of carbuyers when the charging stations needed do not exist and costs are high in 2024, and EV technologies are at learning stage.

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Metro Detroit has 90% of the 17,000 cases in Michigan as the pandemic reaches its peak there this week.  The large Detroit airport renovated and enlarged is seen as a source of the coronavirus as Detroit is where all 3 auto U.S. auto companies are located. GM, and Ford have large manufacturing operations in China, and  Chrysler has plants in northern Italy, the locations where coronavirus has hit hard, and in the case of China where it originated. Health experts say the busy Detroit international airport connecting the Detroit hub to other auto hubs in northern Italy and China- both virus hotspots- may have contributed to the virus hitting Detroit early. This country to country transmission along some route is how the virus has traveled to over 150 countries. For instance German reports show Bavaria as the source of the early cases in Italy's Lombardy region. It could be that German auto companies located in Bavaria with large operations in China resulted in inadvertent transmission of the virus from China through airport in Munich from flights between Germany and China. A Shenyang municipal bureau report provides information on German  investment in Shenyang, Liaoning province. Munich based BMW makes 1.3 million cars here. There is also the newly built Chinese German Tiexi industrial park in Shenyang with 50 German companies BASF, Siemens, located there.  Once the virus arrives in one location its spread depends on the environment with densely packed areas and the health conditions prevailing in a particular area playing their part. Both in New York and Detroit metro area this helped its faster spread in lower income densely packed areas.   ...

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Some manufacturing towns have done worse than others during this period of a surge in Chinese imports. Dunn, North Carolina is one of these towns. It is 40 miles south of Raleigh. In the 10 counties clustered around Raleigh factory employment declined by 40% between 1990 and 2007. Per capita cost of government payments for benefits such as unemployment insurance, food stamps, increased by 74%. Cleveland by contrast was relatively insulated and adapted to the imports by moving into areas of manufacturing that required more technology and complexity. Autor and Hanson studied 722 county clusters throughout the U.S. to discern the impact of the surge in imports and free trade.

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Fiat-Chrysler's Sergio Marchionne tells an automotive conference that the new fuel efficiency targets proposed by the Obama administration will be "an incredible stimulus for the American auto industry." He is confident that the new 2025 standards can be achieved. He said the industry had a bad habit of crying wolf and emphasized the need to get there so that the U.S. auto industry could be at the forefront of the changes taking place. He also cautioned the industry to not get comfortable with China's role as an emerging market that helped increase global sales. That growth is slowing and it presents another potential risk for the automakers- the potential for China to export 10% of what it makes to overseas markets including the U.S. and Europe. All of which increases the urgency of building the industrial base and competitiveness of the automotive industry in the U.S.

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As the August 1 deadline approached first the Japanese and then the Europeans who held out till the end sometimes treating the US with disdain and ridicule, realized that the US was dead serious about tariffs. Even the US business community tended to treat DJT tariffs with disdain not realizing that the tariff battles were first fought against Japan by Deputy USTR Robert Lighthizer under Reagan in the 1980's always to get a fair deal for the US. The recalcitrance of the Europeans and the Japanese can be understood by the non tariff barriers Japan placed on US products and the 10% tariff on US autos the European Union had in place for decades when the US only had a 2.5% tariff on German car imports.  The media in the US and Europe has utterly failed to tell the US side of the story. Here at Lyrarc we remain committed to bring out all the facts so that readers can better understand both sides. Initially the EU adopted an adversarial approach as shown in this report in WSJ by Kim Mackrael and Brian Schwartz. How is it that the Europeans and the Japanese took such a position when since 1980 there was no level playing field for the US on world trade clear for all to see? Not till late May as negotiations dragged on did Japan and the EU take stock of their own positions, DJT having to say US would impose a 50% tariff to get the EU to understand, saying "our discussions with them are going nowhere." In the end in Scotland Leyen and Sefovic for the EU accepted 15% tariff on EU imports to US. Akazawa of Japan had accepted this the week before. ...

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Ford is offering packages with additional incentives, college tution for entire family, packages of upto $140,000 to sign up workers to take buyouts. Its goal is to get 8000 more workers to take buyouts. This is in addition to the 32,000 workers already given buyouts or early retirement.It is putting up job fairs in its plants and mailing each of its 54,000 hourly workers full length DVD " Connecting With Your Future" that shows the advantages of looking beyond the assembly line jobs in auto plants. This suggests that Ford has done its anlaysis and sees things getting tougher in the US auto market over the next few years. The US auto industry will definitely see a smaller market and shrinking sales from now on. Just look at the shrinking sales in the Japanese and German auto industry. Something like this is likely to happen in the US and the attention to sales is going to shift overseas where most of the new sales are going to occur. Companies like GM and Ford will do what IBM and GE are doing shifting their focus to overseas sales in an expanding global economy with more than 50% of their sales from overseas and the US markets playing a smaller role. All this means fewer workers needed in the USA and new workers and plants to be put up overseas in new international locations over the next 10-15 years. Its not just a down cycle for the auto industry, its a big shift and the kind of change that happens every 50 or 100 years as huge macro changes are underway in the world....

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IHS Global Insight estimates that output in the US for the auto industry for 2009 will be 9.5 million vehicles, with capacity of 16.9 milllion vehicles this amounts to 56% capacity utilization number which is very low. Center for Automotive Research estimates that the sales began moving ahead of trend in 1996 and really accelerated after 1998. The easy financing fueled the boom. Now the 16-17 million sales years that were considered normal are seen as inflated and way above the trend. All this suggests that there is a lot of restructuring ahead for the auto industry.

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There is a two week period before the 25% tariff on steel coming into the U.S. goes into effect. This gives time for Canada, Mexico, the EU, Japan and other countries to come up with offers to negotiate or as with the EU come up with its own plan to put tariffs on some American goods. An exemption for Canada is supported by the United Steel Workers Union, as many American companies make steel across the borders. Canada sends the most steel and aluminium to the U.S. With the departure of Gary Cohn as economic advisor, Mr. Lighthizer, the U.S. Trade Representative who pushed for the tariff plan becomes a trusted advisor to the President. Lighthizer is to be seen in Lyrarc pages as having consistently supported fair trade and protecting U.S. workers in these situations since his work in the Reagan administration. The other advisors who are ascendent are Peter Navarro, a trade expert, and Wilbur Ross, the Commerce Secretary. Ross is an experienced business veteran in consolidation of steel and auto parts companies, who pushed for a moderate position to renegotiate NAFTA and convinced president Trump to pursue renegotiation instead of rejecting NAFTA following calls from president Nieto of Mexico and Trudeau of Canada. ...

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China's top trade negotiator is Liu he, Chinese Vice Premier. He is negotiating with Robert Lighthizer, the U.S. Trade Representative who heads the U.S. side in talks. Liu He says China is planning to reduce auto tariffs on U.S. imports to 15%. U.S. exported 266,000 cars to China in 2017. A number of other issues are coming up between the two countries including cyber hacking as federal prosecutors are expected to unseal charges against hackers linked to the Chinese government, according to this report in WSJ. Canada's arrest of Huawei executive was met with China's arrest of a Chinese diplomat.

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The auto parts industry is seeing a huge transformation as American Axle, Visteon and other companies look to Europe, Asia and other countries for growth and shift to a lower cost manufacturing base overseas. Costs are in many cases about 5 times in the USA than in other countries in Asia. And health care costs are a major part of the costs the auto parts makers face in the USA. To get an idea of how fundamental a change is going on American Axle which in 1995 did not have a plant overseas now expects 75% of its $1.3 billion in product orders to be met by plants overseas. And it is planning to build plants in India and Thailand. Visteon which used to be part of Ford Motor and made parts like heating and cooling systems mainly for Ford, will by 2010 according to Visteon's CEO, have sales to Hyundai and Kia of 28% of sales, making the Korean company its largest buyer. Ford's North American operations will only account for 6% of sales from 15% today. That is a dramatic change and involves closing plants in the US. For Visteon this means $635 million in cost reduction mainly through plant closings in 2008-2010....

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This NYT report shows how the chip shortage and surging demand for cars is leading to higher prices for carsin the US. Auto manufacturers ordered fewer chips during the first wave of the pandemic in 2020 resulting in shortage of cars on the market in 2021.

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Mexico has emerged as the world's fourth largest exporter of cars in 2012 after Japan, Germany, and S. Korea. Mexico is expected to surpass S. Korea in a few years. In 2011 2.68 millon cars and trucks were manufactured in Mexico. Honda, Nissan, VW and other companies are building new plants in Mexico. Exports in 2012 are expected to reach 2.14 million cars. With the increase in wages in China's auto plants Mexican wages are highly competitive with China, considering the proximity to markets in N. America and Latin America. Wages in Mexico are about $40 a day for assembly line workers. By comparison wages in China are about $3 an hour. Honda plans to manufacture its Fit small car in Mexico. VW executives say a VW car made in Europe is imported into Brazil with 35% duty, into the U.S. with a 25% duty on trucks, and this can be avoided by making automobiles in Mexico. The quality and reliability of vehicles made in Mexico compares well with vehicles made in Japan, according to Nissan, and productivity at plants is high. There is also good avialability of engineers and plant workers. The growing automobile production also means new plants of auto suppliers from Japan, Germany and other countries in a snowball effect as new auto plants open creating new demand for components....

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Ford utilization of EU plants is less than one of 2 plants 2025. It is renting out the unused plant capacity to Nissan which needs this capacity to make cars in the US to overcome DJT tariffs on imported autos from Japan.

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2012 car sales in France declined by 13.9%. This was higher than the 8.2% decline in the European market, according to the European Automobile Manufacturers Association. Analysts point to low new demand in the developed world- only 2% for U.S. and Europe compared to 70% in emerging markets. Replacement demand is also declining as younger people in urban areas increasingly use subway transportation and bicycles. Better made automobiles last longer and car owners drive less with an aging population reducing replacement demand. This reporter found few customers at auto dealerships in the centre of Paris.

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U.S. president Trump meets with president Moon of South Korea in June 2017 at the White House. South Korea's new leader president Moon tells congressional leaders that he will not reverse the deployment of the THADD missile defense system aimed at blocking a threat from North Korean missiles. President Trump says the renegotiation of the trade treaty with South Korea is taking place, with discussions on South Korean steel exports "dumped" in the U.S. and barriers in the auto exports from the U.S. The U.S. trade deficit with South Korea jumped from $13 billion in 2011 to $27 billion in 2016, leading to charges of unfair trade. 

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US president Biden joins a UAW picket line in Detroit. Biden says he supports the UAW in its wage negotiations for 40% increase in wages. Workers wages are depressed because of concessions made a decade ago to ensure the survival of the US auto companies. UAW leader Shain Fawn was elected directly by the rank and file members for the first time. He has gone back to the UAW's roots for strike action, as it seeks to reverse concessions on tiered wages and address the cost of living crisis. 

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Auto sales for 2010 are expected to come in at 11.5 million, a significant drop from the 17.5 million in 2000. A better job market expected to push the unemployment rate down a bit to 9.7% from 9.8% in November will help, but not by enough. Credit Suisse analyst Christopher Ceraso says each percentage point that the rate is above normal ( about 5%) keeps sales back by about a million auto sales on an annual basis. To get sales back to a 16 million range this would require an unemployment rate of 6%. Economists expect a better US economy in 2011 but the prospects remain uncertain for 2012, bringing unemployment down to about 8-9% if hiring picks up. The other concerns are high consumer debt and a rise in gasoline prices. If gas prices rise and buyers shift back to smaller vehicles, as they did in 2008, this would squeeze margins and profits. This is especially a concern as automobile companies have increased profits with a larger truck and large size vehicle component of sales, in a reverse shift after the shift to smaller cars in 2008-2009. Ford Motor is one example of this. It helps Ford use the extra profits to reduce its debt load but automakers have to be prepared for a sales shift to smaller cars in the face of higher gas prices....