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US Auto Industry Jobs: Trump 2020

The US automotive industry is currently undergoing significant changes as a result of technology and automation, which is predicted to affect the industry’s job outlook in upcoming years. Whoever is the sitting president has some influence in the sector’s employment as a result of trade policies and agreements. Under the current Trump administration, jobs in the automotive industry have declined somewhat, especially due to the China trade war and imposed tariffs on US-made vehicles. However, the recently signed United States, Mexico and Canada Agreement (USMCA), negotiated by the Trump administration, is expected to shift jobs back to the US automotive industry if it is executed as currently outlined during the next presidential term, a definite possibility only if Trump is reelected in November 2020. Lastly, on his 2020 campaign trail, Trump promises to open new car manufacturing plants if he is reelected in order to increase jobs in the automotive industry.

General Findings Related to Jobs in the US Automotive Industry

Current State of Jobs in the US Automotive Industry

  • According to data from the Bureau of Labor Statistics, COVID-19 did impact jobs in the automotive industry. In Michigan, which was the location of 1 in 5 jobs in the auto and auto parts manufacturing sector prior to the pandemic, there were 154,400 such jobs in July, down from 169,100 in March but up from the nadir of 89,400 jobs in April.
  • With regard to President Trump, as of February 2020, there were about 2,400 fewer auto and auto parts jobs in Michigan than when he took office in January 2017.
  • Furthermore, Ford Motor Co. recently announced plans to eliminate some 1,400 salaried employees as part of its restructuring, cost-cutting efforts. However, it cannot be said that this is a result of Trump’s presidency in any way.
  • In terms of how auto workers view Trump’s influence on their jobs, Sean Crawford, a 38-year-old materials driver at Flint Truck Assembly who has worked for General Motors since 2008 told the Detroit Free Press “(With Trump) it’s pretty much just been a continuation of the same economic atmosphere we had under the Obama administration. I’m not saying Trump specifically is responsible but his policies haven’t been friendly toward labor.”

Impact of Tariffs and Trade Wars under Current Trump Administration

  • Paul A. Eisenstein of TheDetroitBureau.com, a leading media source for automotive news and insights, the ongoing trade war between the US and China has resulted in a lot of “collateral damage” for the auto industry especially in terms of automotive jobs and exports.
  • Industry analysts agree that the tariffs placed on American-made vehicles have made them increasingly non-competitive which has led manufacturers like GM, Ford, BMW and Mercedes-Benz to turn to local Chinese sourcing, reducing the job market in the US, with no hope of return in a future where Trump is reelected and the trade wars continue.

Impact of Introduction of USMCA under Current Trump Administration

2020 Campaign Promises

  • In September 2020, both presidential candidates visited Michigan, considered the heart of the US automotive industry, to promote their platform’s position on policies affecting the industry.
  • During his speech at MBS International Airport in Freeland, Saginaw County, Trump emphasized boosting production and increasing jobs pointing to an increase in car plants throughout the Midwest states including Michigan as the source. He even started the speech by “We brought you a lot of car plants, we brought you a lot … and we’re going to bring you a lot more.”
    • It must be noted that the facts show only one major plant, a Jeep plant in Detroit, was announced in Michigan during his current presidency and total auto manufacturing jobs in the state fell 2,000 to 40,300 under Trump as of February, according to federal statistics from the Bureau of Labour Statistics.
  • As stated previously, the COVID-19 shutdown led to widespread manufacturing job losses including in the automotive industry but Trump is hoping that he will be able to bring those jobs back during a second term. By boosting the economy and U.S. sales and by using trade deals to bring back U.S. production, he contends, more American car plants will open creating more industry employment.
  • Lastly, in his speech accepting his reelection nomination on August 27, 2020, he promised, “Over the next four years, we will make America into the manufacturing superpower of the world.”

US Auto Industry Jobs: Biden 2020

Joe Biden promises that he will invest in green technology innovations to help the auto industry grow and generate one million with good salaries if he is elected president.

Joe Biden’s Auto Jobs Plan

  • According to the Detroit News and Biden’s campaign website, the former vice president and current president candidate, Joe Biden, announced during its campaign a plan to create one million jobs in the automotive industry, particularly in its verticals of auto infrastructure, auto manufacturing, parts manufacturers of vehicle batteries and charging stations, and domestic auto supply chains.
  • Biden’s main plan to generate these auto jobs is to invest in green technology and make the US the leader in electric car manufacturing.
  • His campaign promises that every innovation and manufacturing plan will help strengthen today’s, and future auto jobs in America, by investing in innovation and technology to increase domestic content in vehicles.
  • He promises to invest in auto workers to secure their jobs, good salaries, and give them the chance to join a union, allowing them to dominate the auto industry during the 21st century.
  • Through his campaign, Biden has made an emphasis on how during Obama-Biden’s presidency, they saved millions of auto jobs by lending $55 billion to auto companies like GM and Chrysler.
  • On his website, he promises to bring back the jobs that Americans in the manufacturing industries lost during COVID-19 and focus on American manufacturing, starting by rescuing the auto industry and supporting auto manufacturers of all sizes to create jobs and innovate.
  • Joe Biden says on his plan that he will support the industry and help it grow to create and recover auto manufacturing jobs that didn’t have the right support under Trump’s administration.
  • Additionally, he plans to bring jobs back to the country, especially in Michigan, through Buy American provisions and federal procurement.
  • He also promises to increase auto jobs by giving grants and funds to auto manufacturers and auto parts factories of traditional and electric vehicles.
  • Biden promises to increase auto jobs by taxing companies who choose to ship their jobs to other countries, including those in the auto industry like Harley-Davidson.

Experts’ Opinion

  • The United Auto Workers union has expressed its support for Biden’s proposal, saying that although the plan is ambitious, it will be beneficial for both the workers and the industry.
  • While experts agree that Biden’s plan to focus on creating electric vehicles could benefit the auto industry and jobs in America. However, at the same time, could affect gas vehicle manufacturers, forcing them to spend on new technology to adapt, implicate costs for the companies to change to electric vehicles, and affect the oil industry.

US Auto Industry Economics: Trump 2020

Experts seem to agree that the auto industry will experience a decline in sales in 2021 and possibly 2022, regardless of who is elected President of the US. The reasons for this expected decline are COVID-19’s effects on the economy, Trump’s economic and trade policies since January 2017, and continued automation in the manufacturing sector. Our team could not locate any sources that directly predicted the impacts on the auto industry if Trump were elected. Instead, the sources we found were focused on explaining what the effects of Trump’s policies had been up to September 2020.

Helpful Findings

Trump’s Promises and False Statements About the Economy

  • A major analysis published by Atlantic Monthly concluded that Trump’s rollback of the CAFE standards will result in a loss of jobs in the auto industry in the next few years, not an increase in jobs. The President “is not saving jobs with the rollback—he is destroying them. According to his own administration, the rollback will eliminate nearly 13,500 jobs a year. This is clearly stated and repeated throughout the nearly 2,000-page rollback, which is free to read online.” If Trump is reelected, the rollback will happen. If Biden is elected, the rollback may be canceled.
  • The President’s rollback of the CAFE standards “will make owning a car more expensive for the average American. It will intensify climate change and increase the number of Americans killed every year by toxic air pollution. And it will…outright discourage Americans from driving. The previous sentences, … are facts printed within the rule itself. (They can be found, respectively, on pages 1,414; 723; 1,524; and 1,589.) Altogether, according to the Trump administration, the rollback will inflict as much as $22 billion of net damage on the American economy.”
  • “GM employed 5,000 fewer workers in the United States [in 2019] than it did in 2016″, according to the Atlantic Monthly industry analysis. This fact contradicts Trump’s 2020 campaign statements declaring that he had increased jobs in the auto industry.
  • On January 20, 2017, “GM was worth about $55 billion. [In February 2020] on the eve of the coronavirus crash, its valuation was already off by $5 billion. Today [April 2020], it is worth $34 billion.
  • The Atlantic Monthly article also pointed out that “The S&P 500 autos index, which tracks the industry as a whole, lost 22 percent of its value from Trump’s inauguration to February 2020. It has lost roughly another third of its value since then.”
  • One of Trump’s 2016 campaign promises was that he would return manufacturing of vehicles to the US from overseas. However, statistics indicate that “a large percentage of vehicles sold in the U.S. still clearly come from, or have content originating from, outside the country. “…[S]tatistics compiled by the National Highway Traffic Safety Administration each year indicates that among the Detroit-based automakers, General Motors, Ford and Fiat Chrysler (or FCA), the average percentage of U.S.-Canadian content in their product lineups went down — not up — since Trump took office in 2017.”
  • Regardless of who wins the presidential election, auto industry leaders believe that the industry will experience a slowdown in 2021. “A survey of business leaders and auto executives done by Mich Auto, a trade association that [is] part of the Detroit Regional Chamber of Commerce; the Right Place, an economic development group in Grand Rapids; and Dykema, a business law firm, found 54 percent of auto respondents [had] a negative outlook on business over the next year, compared with 46 percent of the respondents overall.”
  • After a campaign appearance in Ohio by Trump, “[t]he Washington Post gave Trump the maximum four ‘Pinocchios’ for saying many auto plants ‘are being built right now’ in Ohio, Michigan, and South and North Carolina. Neither Carolina has gotten a new plant since ground was broken on two in 2015 during Barack Obama’s presidency.” Trump’s policies have not led to the opening of new auto plants.
  • A report from the Bureau of Labor Statistics analysis released on September 1, 2020, said that before the COVID-19 pandemic, the manufacturing sector “was on track to lose nearly 450,000 workers by 2029, the most of any area of the economy.” Trump has claimed that manufacturing jobs have increased under his policies, especially in the auto industry.

The Effects of Trump’s Policies on Trade

  • Since Donald Trump was elected in November 2016, he “has brought a different approach to trade, sparking fights with U.S. allies and adversaries in search of better deals.” For example, Trump started a trade war with China. “The United States raised tariffs on $200 billion of Chinese imports and the Chinese responded by raising tariffs on $60 billion in U.S. goods.”
  • “…America’s farmers have taken some of the biggest hits as the Chinese have hiked tariffs on U.S. agricultural products such as corn, wheat and soybeans.” Reducing the income of farmers makes it difficult, if not impossible, for farmers to buy new equipment such as tractors, combines, and planters, as well as consumer vehicles like pickup trucks.
  • Tariffs affected hundreds of car parts, steel, aluminum, and other items needed by vehicle manufacturers in the US.

US Consumer Sentiment

  • Americans’ consumer confidence is tracked by the University of Michigan’s monthly survey findings, released as “The Index of Consumer Expectations.”
  • “The Index of Consumer Expectations focuses on three areas: how consumers view prospects for their own financial situation, how they view prospects for the general economy over the near term, and their view of prospects for the economy over the long term.”
  • In each monthly survey, consumers are asked about 50 questions. Each question relates to a different aspect of the consumer’s attitudes and expectations. “The samples for the Surveys of Consumers are statistically designed to be representative of all American households, excluding those in Alaska and Hawaii. Each month, a minimum of 500 interviews are conducted by telephone.”
  • In February 2020, consumer confidence was rated by the survey as 101.9. By April, it was rated as 71.8. In September, it was 78.9. Thus, in 2020 so far, the American consumer confidence has dropped by 30 percent and risen slowly to a net loss of 23 percent. [101.9-71.8 =30.1. 78.9-71.8=7.1. 101.9-78.9=23]
  • The September survey result was interpreted by the University of Michigan survey team as an indication that “the election has begun to have an impact on expectations about future economic prospects.” Somewhat surprisingly, the survey indicated that Republicans were less optimistic about the US economy than Democrats.

Declining Sales of Big-Ticket Items Including Vehicles

  • According to research published in May 2020 by CNBC, “[a] majority of American millionaires say they plan to spend less this summer than in years past….”
  • The Q2 CNBC Millionaire Survey is taken by “750 people with investible assets of $1 million or more.”
  • Respondents to the 2020 survey reported that “[r]eal estate, new cars and vacations are the expenses they are most likely to put on hold, and many won’t complete those purchases for at least a year.”
  • Respondents were asked when they plan to make purchases of real estate, new cars, and vacations. “The largest number (37 percent) said in 2021 or later.
  • The millionaires were cautious in their future expectations. “Half believe the recession will last longer than the Great Recession of 2008-09.”
  • The Q2 CNBC Millionaire Survey did not ask about the effects of the upcoming 2020 American presidential election.
  • An analysis by Boston Consulting Group (BCG) disclosed that “The primary reason [for a drop in car sales in 2020] is that most consumers simply don’t want to buy a new vehicle right now … because of looming uncertainties: how long the virus will last, how long their paychecks will keep coming in, how long it will take for the economy to recover. Consumer confidence and the economy are inextricably linked, and both will remain suppressed beyond the short term, for some 12 to 18 months—or until a vaccine is developed and made widely available.”
  • BCG predicted that the vehicle purchase market would see a drop in demand resulting in a decline in sales of 20 percent in 2020. “In the most pessimistic scenario,… sales would fall by approximately 40 percent in 2020.”
  • As for 2021, BCG does not take the presidential election into account, and expects the market to be slow “during the first half of the year prior to a more concerted rebound in the second half, as fear subsides (assuming the virus is reasonably under control) and the impact of pent-up demand begins to be felt. Overall, we expect that 2021 vehicle sales by volume will fall below prior forecasts by approximately 5 percent, with the potential for a decline of 15 percent to 20 percent in our most pessimistic scenario. “
  • Another reason for a decline in vehicle sales is the delay or cancellation of new 2021 models. USA Today reported in June 2020 that “at least 24 redesigned or new North American-built vehicles that were poised to roll out in the coming months won’t come out on time, according to LMC Automotive, which provided a partial list to USA TODAY. They include the Ford F-150, Cadillac Escalade and Acura MDX.”

US Auto Industry Economics: Biden 2020

Former Vice President Joe Biden released the second part of his ‘Build Back Better‘ plan and while the focus appears to be on infrastructure and clean energy, there is also a lot of emphasis on the automotive industry. From his website, Biden vows to save the country’s auto industry and help it to win the 21st century. While we could not locate many credible sources that directly predicted how the economics of the United States automotive industry is expected to change if Biden wins the 2020 election, we were able to leverage data from several sources as well as Biden’s ‘Build Back Better’ plan to curate and present the information below.

Electric Vehicles

  • In his master plan, Biden promised to use levers of the Federal government to accelerate the country’s transition to electric vehicles. Biden stated that he plans to increase federal procurement by approximately $400 billion within his first term if he wins the election and that the money will be used to purchase clean energy items such as batteries and electric vehicles in order to position the country’s automotive industry as a leader in the world’s clean energy market.
  • According to Yahoo Finance, Biden’s clean energy plan will upgrade around 3 million government vehicles to electric vehicles. Biden said, “We’re going to convert these government fleets to electric vehicles made and sourced right here in the United States of America.” Biden’s plan also includes 500,000 electric vehicle charging stations.
  • Additionally, Biden’s game plan includes the acceleration of research on battery technology as a way to support the development and production of batteries within the country and by American workers. From his website, “America must accelerate its own R&D with a focus on developing the domestic supply chain for electric vehicles.”

Trade

  • In addition to killing the Trans-Pacific Partnership (TPP) and strong-arming Canada and Mexico to renegotiate NAFTA to USMCA which still does not appear to be bringing back automotive jobs, President Trump’s administration has also caused trade wars, especially with China. The US-China trade war caused the cost of Chinese-made auto parts and other imports such as aluminum and steel to rise. Moreover, US auto exports to China drastically decreased as a result of the tit-for-tat tariffs between the two counties. From exporting 314,580 vehicles to China in 2014, US auto plants exported only 192,210 in 2019. It is expected that if Biden wins, the threat of increased tariffs and new trade wars that might harm the automotive industry will decline.

Taxes

  • The former vice president also plans to implement a 10% offshoring penalty tax as a way to keep US auto manufacturing domestic. If Biden wins, the 10% penalty tax will apply to the profits of US companies that will be selling their products in the country after they have been produced abroad. According to Strong Automotive Merchandising, this might bring about concerns since Biden also plans to increase the corporate tax from 21% to 28% to reverse some of the cuts President Trump’s administration put in place.

Consumers’ Confidence

US Auto Industry Regulations: Trump 2020

Trade, taxes, and environmental regulations are expected to be impacted if Trump wins the 2020 election. Trump if elected, is expected to enact significant tax cuts, enact new duties on European imports, and continue to press for the deregulation of automotive emissions.

Trade Regulations

  • According to NBC, trade is one of the areas that will be impacted if Trump wins the 2020 election. Killing the Trans-Pacific Partnership (TPP) was “one of the first acts the Trump administration.” The president also renegotiated the North American Free Trade Agreement (NAFTA).
  • The Trump administration has also triggered trade wars with countries such as China. This has raised the cost of Chinese-made auto parts, and imports such as aluminum.
  • According to NBC, exports to countries like China have reduced “due to tit-for-tat tariffs.” This is expected to continue if Trump wins the 2020 election.

Taxes

  • According to NBC, “Trump enacted significant tax cuts during his first administration and has talked about further reductions.”
  • Critics of the Trump administration contend that trade wars with countries such as China “have resulted in de facto taxes in the form of tariff-led price increases.”
  • NBC reports that Trump “continues to raise the prospect of enacting new duties on European imports, autos in particular.”

Environmental Regulations

  • Environmental regulations are expected to be impacted if Trump wins the 2020 election. According to NBC, Trump if elected, will continue to press for the deregulation of automotive emissions.
  • After taking office, Trump has ordered the “rollback of the aggressive Corporate Average Fuel Economy, or CAFE, mandates enacted during the Obama administration.”
  • In March, the Trump administration enacted a new rule that called for ” fuel economy and emission standards to increase by 1.5% annually, rather than the approximately 5% increases in the 2012 rule. According to the rule, the standards will increase to 40.4 miles per gallon by vehicle model year 2026, about 6 miles per gallon fewer than the 2012 rule.”
  • Trump has also removed regulations that helped California to set emissions standards. The standards set by California were tougher than those set by the Environmental Protection Agency

US Auto Industry Regulations: Biden 2020

Should Joe Biden win the 2020 elections, one of the critical legislation that could be passed into law is the “Clean Cars for America” proposal put forward by Senate Minority Leader Chuck Schumer. The proposal when enacted will provide incentives for consumers to exchange their gas-powered vehicles for more energy-efficient electric vehicles; under the program, the country could move more than 63 million gasoline-powered vehicles off the road in 10 years. Additional impacts of a Joe Biden win on regulations in the automotive industry have been provided below.

“Clean Cars for America” Proposal

  • In his $2 trillion clean energy and infrastructure plan, Joe Biden announced his plans for decarbonizing the transportation sector. One of the ways he plans to achieve this is by adopting a proposal put forward by Senate Minority Leader Chuck Schumer.
  • The proposal dubbed the “Clean Cars for America” seeks to grant consumers “rebates to swap old, less-efficient vehicles for these newer American vehicles built from materials and parts sourced in the United States.” The plan excludes gas cars entirely and requires consumers to purchase vehicles with no emissions at all. The proposal was unveiled in the fall of 2019 and seeks to remove over 63 million gasoline-powered vehicles off the road between 2020 and 2030.
  • There are three major parts to the program:
    • Making clean vehicles affordable by giving consumers a substantial cash voucher to trade-in their gas-powered cars and buy a U.S.-assembled and affordable plug-in electric, plug-in hybrid, or hydrogen fuel cell car.” A sum of $392 billion has been proposed for this.
    • Making charging infrastructure accessible through a new grant program to states and localities to ensure all Americans have access to charging infrastructure.” A sum of $45 billion has been proposed for this.
    • Reasserting U.S. leadership in clean car manufacturing with robust incentives for manufacturers to build new factories or re-tool existing factories in the United States to assemble zero-emission vehicles or manufacture charging equipment. A sum of $17 billion has been proposed for this.
  • Joe Biden also plans to move 3 million government cars from gas to electric power. In addition to this, Joe Biden’s administration also promises to install at least 500,000 EV charging stations.
  • Overall, the presumptive nominee of the Democratic Party is promising net-zero emissions by 2050.

PRO Act

  • Joe Biden has also thrown his weight behind the Protecting the Right to Organize (PRO) Act. An Act already passed by the House of Representatives in February 2020. The Act, “would amend some of the country’s decades-old labor laws to give workers more power during disputes at work, add penalties for companies that retaliate against workers who organize and grant some hundreds of thousands of workers collective-bargaining rights they don’t currently have,” should it be passed by the Senate.
  • Joe Biden promises to work on ensuring the PRO Act is passed into law. Joe Biden’s plan noted that although the productivity of the average American worker has increased by 70% between 1979 and 2018, their wages have only increased by 12% within the same period. One of the reasons cited for this is the decline in union density.
  • Tying the PRO Act to the auto industry, the presidential candidate stated that his support for the Act will “ensure auto workers can more easily choose to join a union and bargain collectively with their employers.”

Fuel and Emissions Standards

  • Part of Joe Biden’s clean energy and infrastructure vision includes a plan to “establish ambitious fuel economy standards that save consumers money and cut air pollution.” This, he notes, will quicken the adoption of zero-emissions light- and medium-duty vehicles, while also saving consumers money.
  • In the same vein, Joe Biden has also vowed to “toughen fuel economy standards to ensure 100% of new sales for light and medium-duty vehicles will be electrified.”
  • He plans to achieve this by negotiating fuel economy standards with industry stakeholders such as the workers’ unions and manufacturers as well as states and environmentalists.
  • While the standard is yet to be determined, it should be noted that the Corporate Average Fuel Economy (CAFE) of the Obama-Biden administration adopted in 2012 sought to peg the fuel efficiency standards at 46.7 mpg by 2026.
  • It is also worth noting that the Trump administration had earlier proposed freezing the fuel economy standards at 2020 levels all through 2026, reversing the CAFE proposal of an annual 5% annual increase.
  • Given the aforementioned, it is not far-fetched to expect the Biden Administration – should he win – to roll back the Trump administration’s freeze and then adopt and adapt the content of the CAFE standards.
  • In the same vein, Joe Biden has also vowed to “toughen fuel economy standards to ensure 100% of new sales for light and medium-duty vehicles will be electrified.”

Buy America Provisions

  • Joe Biden also plans to move 3 million government cars from gas to electric power. This is part of Joe Biden’s Buy American provisions that are designed to stimulate immediate and short-term demand for U.S. auto manufacturing.
  • More importantly, the program aims to bring back auto industry jobs to the United States.
  • Additional plans under the ‘Buy America’ provisions include “investments in technology and innovation to spur U.S. production of new energy and safety technologies, thus increasing the domestic content in U.S. vehicles,” as well as providing “dedicated grants and funding to help manufacturers retool and build new factories will help ensure U.S. global leadership in electric vehicle manufacturing, including EV components and batteries.” The Biden campaign team also noted that additional details of the plans will be provided in the future.
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