President Trump made headlines in Japan today when he called on the nation’s automakers to build more cars in the US, saying, “We love it when you build cars—if you’re a Japanese firm, we love it—try building your cars in the United States instead of shipping them over. Is that possible to ask? That’s not rude.”
Japan, Inc., already builds in the US three-quarters of the cars it sells in the US. That was about 4 million cars last year. If you look at the Trump’s extended quote (below), he appears to acknowledge the US has Japanese assembly plants, by saying that in the room, “We have a couple of the great folks from two of the biggest auto companies in the world that are building new plants and doing expansions of other plants” …and then launches into the riff telling the Japanese to “try building your cars in the United States.” It is not the kind of sentence you’d want to diagram on an English test. Or to explain, if you’re Sarah Huckabee Sanders.
Japanese plants, design centers, R&D centers in the US. (Source: JAMA)
The Facts About Foreign Automakers in the US
The reality is that Japanese (also Korean and German) automakers have a big footprint in the US. Japanese-company manufacturing is concentrated in the southeast, middle South, Ohio, and Texas, with 24 plants total in the US. The Japanese also have 43 R&D and design centers here, especially in California, Michigan, and the Northeast. All told, they have facilities in 20 states with almost 100,000 direct employees, and at least that many again counting the suppliers of stamped body panels, seats, electronics, wiring harnesses, and tires and wheels.
In addition to the 4 million cars built and sold into the US, another 412,000 cars and trucks were exported from Japan-in-the-US plants in 2016. All of this data is from the Japan Automobile Manufacturers Association (JAMA).
Another factoid: The largest US exporter of cars by a single company isn’t Ford, General Motors, or Fiat Chrysler (FCA, builder of Chrysler, Dodge, and RAM). It’s BMW and its Spartanburg, SC, plant, which exported 70 percent of its 2016 production of 411,000 vehicles, or 288,000 vehicles sent to export. The factory builds every BMW crossover/SUV except the subcompact BMW X1; it is BMW’s biggest plant in the world.
Nissan Rogue at Smyrna, Tenn., plant. Nissan had built 10 million vehicles in Tennessee by 2014.
Long vs. Short-Form Trump Quote
Speaking in Tokyo Monday morning, with officials from Toyota and Mazda present, here’s what Trump had to say. This includes the shorter quote (boldfaced) that set people wondering how dialed-in the president is:
When you want to build your auto plants, you will have your approvals almost immediately. When you want to expand your plants, you will have your approvals almost immediately. And in the room, we have a couple of the great folks from two of the biggest auto companies in the world that are building new plants and doing expansions of other plants. And you know who you are, and I want to just thank you very much. I want to thank you.
I also want to recognize the business leaders in the room whose confidence in the United States — they’ve been creating jobs — you have such confidence in the United States, and you’ve been creating jobs for our country for a long, long time. Several Japanese automobile industry firms have been really doing a job. And we love it when you build cars — if you’re a Japanese firm, we love it — try building your cars in the United States instead of shipping them over. Is that possible to ask? That’s not rude. Is that rude? I don’t think so. [Laughter.] If you could build them. But I must say, Toyota and Mazda — where are you? Are you here, anybody? Toyota? Mazda? I thought so. Oh, I thought that was you. That’s big stuff. Congratulations. Come on, let me shake your hand. [Applause.] They’re going to invest $ 1.6 billion in building a new manufacturing plant, which will create as many as 4,000 new jobs in the United States. Thank you very much. Appreciate it.
So, the president did make a rambling mention of “business leaders in the room whose confidence in the United States—they’ve been creating jobs—you have such confidence in the United States, and you’ve been creating jobs for our country for a long, long time.”
The president also spoke broadly about how quickly approvals come. Eventually they do because states and towns love the jobs that pay good wages for the area–often $ 15 an hour plus benefits for line work. But there are also state and local approvals required, and some citizens want government to make sure breeding habitats aren’t bulldozed, and that the community has enough sewage and fresh water capacity to go around.
Toyota has six US plants. It will spend $ 10 billion 2017-2022 to add factory capacity and move its US HQ from SoCal to Texas.
“Two of the Biggest Auto Companies:” Toyota, Mazda
He lauds “two of the biggest auto companies in the world [Toyota, Mazda] that are building new plants and doing expansions of other plants,” a remark that many or most would take to mean the US. Toyota is the largest automaker based on 2016 sales revenues. But Mazda is a comparative pipsqueak, a company with many well-reviewed cars such as the Mazda CX-5 crossover, but somewhere around No. 15 when it comes to sales volume or dollar volume.
Some news outlets, especially the Washington Post, said the small quote fragment is disproved by the larger context. We’d call it a draw: Trump’s stream-of-consciousness speaking in Japan mentions automakers showing “such confidence in the United States, and you’ve been creating jobs for our country for a long, long time.” Then, two sentences later he harangues them to “try building your cars in the United States instead of shipping them over.” It’s hard to know what’s going through his head. The speech could have been clearer and probably should have acknowledged how many cars are already built here. Nowhere did Trump mention–or thank Japan–that three-quarters of Japanses cars sold in the US are built here. That amount, as the President might say, is “yuge.”
Trump’s remarks were in the broader context of the “massive trade deficits at the hands of Japan for many, many years,” according to Trump. He noted that Japan buys a lot of US military hardware (“the best military equipment in the world”), adding, “many millions of cars are sold by Japan into the United States, whereas virtually no cars go from the United States into Japan.” He is correct there. US sales into Japan are only about 13,000 a year, but few US models would be compact enough to interest the Japanese home market. Ford is making a stab at the Japanese market with its subcompact Fiesta sedan.
Anyway, the Japanese market is mature, it’s one-quarter the size of the US market, and the real market in Asia is China, where the US is doing reasonably well, including some surprises: The Chinese go wild for Buicks, buying more than Americans do. Also, the Chinese, like the Japanese, admire European cars, and consider Audi-BMW-Mercedes-Volvo to be prestige cars, not Cadillac or Lincoln.
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