Trump’s prices urge American automobile production. Here’s why it’s complicated

DESTROIT – When President Donald Trump hinted last week a suspended from 25%car rates, he suggested that it would be to allow car manufacturers to move or increase the production and American vehicle parts.

“They need a little time because they are going to do them here,” said Trump on April 14. “But they need a little time, so I’m talking about things like that.”

Although automotive managers and experts are suitable that more time would be useful, an extension to strengthen the manufacture of the United States is not so simple.

On the one hand, an additional price of 25% of automotive parts should take effect by May 3, which would increase the cost of a vehicle even if it is assembled in the United States rather than important.

And for another, car manufacturers and suppliers do not “move” plants, as some politicians have requested. The relocation of production lines takes years of planning and construction – and can be expensive.

The actual construction of an assembly plant must be carried out in conjunction with job workers, the construction of infrastructure such as water and energy supplies and the construction of a part of parts, among other considerations. It is after determining the site, the purchase and any potential change in zoning.

Such installations, such as a new factory of 16 million square feet of Hyundai engine In Georgia, may require thousands of acres of land and include millions of square feet of factory space.

“All of these things have to be set up,” said Doug Betts, a veteran in the automotive industry who is president of JD Power’s automotive division. “It’s a very, very complicated process.”

Allowing alone for a new factory can take six to 12 months. It can take another 12 months to 18 months, if not more, to build the installation, followed by another year or more in the tools and production of production, according to Collin Shaw, president of the Mema Original Equipment Suppliers Association.

The main type of plants that Trump wants car manufacturers to build in the United States are large assembly factories of several billion dollars that take years to build. Complete assembly factories employ thousands of workers and are more like the manufacture of cities, made up of a bodywork workshop, a paint, stamping plant and other support facilities.

According to industry leaders and experts, even smaller suppliers who could mobilize more quickly, could still take years and are often built near larger plants.

“I am convinced that the location is the path, but locating the new models that are built elsewhere in the world do not occur overnight,” said Christian Meunier, president of Nissan Americas, said CNBC. “Nissan is very fast, but it’s not going to be a question of months. It’s a matter of years.”

Meunier said the automaker aimed at “maximizing” production in its largest American production plant in the midst of Trump’s prices, although he refused to specify a calendar to do so.

This week, six of the main policy groups representing the American automotive industry joined in a unusual manner to put pressure on the Trump administration against the implementation of upcoming prices on automotive parts.

“President Trump indicated an opening to reconsider the 25% prices of the administration on imported automotive parts – similar to the recently approved price reduction for consumer electronics and semiconductors. It would be a positive development and welcome relief,” said the letter.

The quickest way to increase American production is to use existing installations, for which supply chains have already been established, as Nissan plans to do so.

The most expensive option is to build a new assembly plant, which can take time but is delivered with a delayed effect for the community while suppliers work to locate the production of certain parts and components.

Each direct work created in the manufacture of vehicles supports an average of 10.5 additional American jobs, according to a 2022 report of the Alliance for Automotive Innovation Trade Group.

The new most recent automotive assembly plant in the United States is Hyundai’s “Metaplant” in Georgia.

The $ 12.6 billion project, which Trump presented as a success for American manufacturing, took around 2 and a half years to build. This does not include the current rise in the factory and an unhappy duration for the selection of sites, permits and other processes.

Hyundai’s delay has been relatively rapid given the amount of investment and the size of the factory, which has a capacity of 300,000 vehicles per year and a planned employment of 8,500 jobs by 2031.

“If you build a whole new one, you will quickly go lightning to do it in two years, and you must have everything ready to leave. More likely, it is in the type of range of four years,” said Mark Wakefield, partner and manager of the world automotive market for the Alixpartners consulting company.

Jeep parent StelllantisFormerly Fiat Chrysler, has taken a similar construction period of 2 and a half years and spent $ 1.6 billion to convert two factories from the 2019 to 2021 motorcycle group in the first “new” Strait assembly plant in almost 30 years.

There are unique cases of car manufacturers moving mountains and spending billions of dollars to get things done more quickly. An abnormal case outside the United States was Tesla plant in China. The installation, with the support of Chinese officials, was allegedly built in less than a year in 2019.

Unless you build entirely new installations, there are ways to increase American production much faster and for less costs. More specifically, if the product is made in several locations and the automaker or the supplier has an additional and unused capacity.

Many car manufacturers, such as General MotorsUse several plants to produce their highest products. The Detroit car manufacturer produces his Chevrolet Silverado in light service in factories in Canada, Mexico and the United States

The day when the 25% prices of Trump on imported vehicles entered into force, GM said that it would increase the production of full -size vans in its assembly plant near Fort Wayne, Indiana, and hires hundreds of temporary employees. Such a decision is essentially low -level fruits for a company.

Car manufacturers protect the production of their most profitable vehicles as much as possible. In the past, this has meant spending billions of dollars on a change of plant or even a double production of older and more recent models of the same vehicles.

Move quickly can have its drawbacks. To lose the least possible production of its Ford Explorer SUV in 2019, Ford spent $ 1 billion to completely reorganize its bodywork workshop and provide other improvements to the unique installation of Illinois which produces the vehicle.

The entire process for Ford has taken unprecedented day, but the launch of the vehicle was sadly defective, costing the billions of the company’s reminders and corrects. At the time, Ford called him “one of the most complex renovations in business history”.

“Being out of production in a segment is devastating,” said Betts, who worked at Apple as well as Stelllantis and other car manufacturers.

Betts said most of the companies will make a “marguerite chain” in which they build another factory for a new model, while continuing to produce the old. It allows easier transition, but companies must have the factory space and capital to eliminate such a movement.

Without forgetting that car companies must be sure that regulations or commercial policies do not change as construction is underway, which leads to billions of dollars in unnecessary expenditure.

“This is not a turn of the switch,” said Swamy Kotagiri, CEO of the Automobile Supplier based in Canada Magna last week at a meeting of the Automobile Press Association near Detroit. “We have to look at it from a pragmatic point of view. I don’t see how you can just take something and move. It seems easy, but that is not the case.”