Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know so you can seem important and informed on Twitter. Just kidding, no one is good on Twitter.
1st Gear: One Nation Under The Dollar
Everyone likes to *say* their priority is buying American-made goods, including cars. And during the campaign season, then-candidate Donald Trump made a huge deal of coming after automakers, foreign and domestic, who weren’t building cars in America using his all-powerful Twitter account. Remember the ultra-patriotic Toyota Camry making the rounds at the last couple auto shows? It was basically Toyota’s way of saying “We’re American, really, please don’t tweet at us, oh God.”
But it turns out that in reality most Americans are pragmatic and looking to save money above all else. Or are hypocritical. Or both are true. USA Today reports that these calls to “Buy American” really aren’t helping move U.S.-made goods, including cars:
It’s not that shoppers aren’t interested in U.S. made goods. A 2012 survey by The Boston Consulting Group found that nine out of 10 consumers said they would pay more for domestic-produced items to keep jobs in the U.S., while four out of five agreed that purchasing American-made goods showed patriotism.
Carrie Aulenbacher, who manages commercial real estate in Erie, Pa., is happy with the quality of the American-made kitchen set she bought 12 years ago, which she has never had to repair or replace. But when it comes to smaller, everyday purchases, a cheaper item that was made in China will do just fine.
“If I’ve saved up ... I prefer something made in the USA because it’s often better quality,’’ Aulenbacher said. “But when deciding on a spur of the moment purchase, price comes first for me.’’
And for cars:
For example, the Toyota Camry, which is assembled at the Japanese company’s sprawling factory in Georgetown, Ky., is the most made-in-America vehicle in the U.S., according to a Cars.com assessment of vehicle components and assembly.
At the New York Auto Show last month, the automaker prominently featured a Camry model decked out in red, white and blue with painted lettering boasting about the sedan’s American heritage.
But sales aren’t getting a boost because of it. U.S. Camry sales fell 13.3% in the first quarter of 2017, compared with a year earlier, largely due to declining interest in mid-size sedans.
I think regardless of your politics, you can realize the vital importance of American manufacturing jobs, American labor and domestically-produced goods, whether it’s boots or Chevrolets or Toyotas. But as long as U.S.-made goods are undercut by foreign-made ones, all the tweets and flag-waving in the world aren’t gonna do much.
2nd Gear: Ford Temporarily Lays Off Ohio Workers
Speaking of, Ford is temporarily laying off a shift of 130 workers at its Ohio Truck Plant, as demand for the the F-650 and F-750 medium-duty trucks starts to dip. Turns out we’re addicted to SUVs and trucks but only up to a certain size. This plant has some political implications too, reports Automotive News:
The layoffs will last more than four months, from May 8 until the end of September. The automaker said most of the layoffs will be voluntary. Effected employees, if they have at least one year seniority, will receive roughly 75 percent of their pay while on leave.
Ford moved production of the trucks to Ohio from Mexico in August 2015 as a result of the 2011 labor contract with the UAW. The move made headlines last year during the presidential campaign as then-candidate Donald Trump berated Ford and other automakers for moving some vehicle production to Mexico.
Ford expects demand to pick up again this fall.
3rd Gear: How Mexico Sells Out Its Own Workforce
Now, with these auto jobs moving to Mexico—jobs that were once good-paying manufacturing jobs that underpinned the American middle class—you may think that the same effect is happening there, that Mexican workers are benefitting from these gigs and moving up in the world as they provide for their families. You’d be wrong.
Bloomberg has a report on how increasingly, automakers and the Mexican government sign wage contracts well before plants open, before workers and their unions have a say in what’s going on, locking in super-low wages that are in some cases half of what workers make at other plants.
For example, at the new BMW plant where the 3 Series will be built, workers are set to start at about $1.10 per hour—half the starting average at most Mexican plants. And the workers probably won’t know they don’t actually belong to a union when they start.
So-called protection contracts— agreements negotiated between a company and a union that doesn’t legitimately represent workers—are illegal in the U.S. and Germany. But Lance Compa, a senior lecturer at Cornell’s School of Industrial and Labor Relations, says they’re standard operating procedure in Mexico, where deals are cut factory by factory rather than collectively across a company or industry.
Experts say this is a primary reason that wages in the auto sector have stagnated in recent years, despite a fresh wave of investments by foreign carmakers, most recently by German and Japanese manufacturers. Mexico’s union bosses and politicians are more interested in keeping corporations happy than in raising the living standards of workers, Covarrubias argues. “Protection contracts are a way to keep wages artificially low,” he says.
That’s fucked up. Think about that the next time you buy a Mexican-built BMW.
4th Gear: Jag Surging
There’s some good news among all this doom and gloom, especially if you’re a fan of Jaguar and the generally excellent cars they’ve been turning out as of late. Bloomberg reports Jag has about doubled its U.S. sales in the past year, thanks to the F-Pace crossover and XE sedan, and is rapidly catching up to Porsche in sales.
With a tide of capital from parent Tata Motors and a fully overhauled product-line, Jaguar is even nipping at the heels of mighty Porsche when it comes to U.S. sales. In the first four months of the year, American drivers rolled out of dealerships with 14,606 Jags, more than double the number purchased in the year-earlier period.
But Porsche’s growing too!
However, Volkswagen, Porsche’s parent, likely isn’t too concerned about its crown jewel getting dinged. Porsche sales have increased slightly in the first four months of the year and continue to spin off some of the best profit metrics in the business. Sliding into a bare-bones 911 still requires at least $91,100—about $30,000 more than the starting sticker on an F-Type.
Luxury brands, especially ones that make SUVs, are making bank at the moment.
5th Gear: How’s Volkswagen Doing?
How is Volkswagen these days, post-dieselpocalypse? More focused on the core VW brand, more focused on volume over niche, rebuilding profits, and trying to kill Tesla with electric SUVs, reports Bloomberg:
As Volkswagen emerges from the diesel scandal, the company has intensified an overhaul at its largest division, with the aim of giving the Golf hatchback-maker more autonomy within the 12-brand group. In the process, VW’s lineup will get bigger and more energy-efficient as it fills gaps and reviews the fate of aging classics including the Scirocco and Beetle.
“Our mission is clear: We want to make the Volkswagen brand competitive for the future,” Herbert Diess, VW’s brand chief said at an event detailing first-quarter performance. “By 2025, we aim to play a leading role in the continuously changing automotive industry.”
VW is starting to restore profits and rein in bloated costs even as it takes a huge financial hit from the emissions crisis that erupted in September 2015. The Wolfsburg, Germany-based automaker is bracing for a cash outflow in the “double-digit billion-euro range” this year after earmarking 22.6 billion euros ($24.8 billion) in total costs so far for fines, buybacks and repairs of tainted cars. The scandal exposed weaknesses in the VW brand, which absorbed the brunt of the reputational damage.
Good luck, fam!
Reverse: RIP Bertha
Neutral: Do You Really Care About U.S.-made Goods?
Or do you just say you do like everyone else? How much of a priority is an American-made car for you?