The Wall Street Journal: Auto Makers Consider Shifting More Manufacturing to North America

Auto Makers Consider Shifting More Manufacturing to North America
The Wall Street Journal
By Chester Dawson and William Boston
Oct. 5, 2018

Foreign car makers are considering moving more manufacturing to North America from their overseas plants following the recent U.S. trade deal with Canada and Mexico.

Within days of the U.S. and Canada reaching a pact to replace the roughly 25-year-old North American Free Trade Agreement, executives at several foreign car makers said they are considering changes to their supply chains that would shift more auto-parts manufacturing work to the U.S., Canada and Mexico.

“We will allocate more U.S. production for the U.S. market,” BMW AG CEO Harald Krüger told reporters at the Paris Motor Show this week. He said that the German car maker already sources many parts in the region, but the new trade pact will accelerate a shift in investment.

Daimler AG CEO Dieter Zetsche said at the same event the new agreement could force it to shift more engine manufacturing to the U.S., where it builds cars and sport-utility vehicles at a factory in Tuscaloosa, Ala.

Carlos Ghosn, head of the Renault-Nissan-Mitsubishi alliance, said the new North American trade pact would spur the car-making group to invest more in both the U.S. and Mexico, but didn’t provide details. Honda and VW said in separate statements that they are still analyzing the potential impact of the deal on their local operations.

Mazda Motor Corp. , which relies on Japan for engines and transmissions, would also struggle to meet the higher content requirements on its Mexico-built Mazda3 compact car.

“Naturally, it will change since we haven’t reached 75%” local content,” said Mazda CEO Akira Marumoto. “Components that have to be made within the Nafta region will increase.”

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