Ford Says American Steel Is Now the Most Expensive in the World Thanks to Trump

Illustration for article titled Ford Says American Steel Is Now the Most Expensive in the World Thanks to Trump

Expensive trade wars, who the shorts REALLY want to win, and burning BMWs. This is the Morning Shift for October 23, 2018.


1st Gear: Trade Wars Are Good, And Easy To Win

President Donald Trump started a trade war with China and seemingly the rest of the world, and he began the war by hiking up tariffs on steel and aluminum. While the intended purpose was to “bring steel back” or somesuch, the market forces at work are vastly greater than any mere tariffs that can be thrown at such a globalized commodity.

The end result? Steel is just way more expensive now, Ford says, according to Bloomberg:

Ford Motor Co. said Donald Trump’s tariffs have made steel more expensive in the U.S. than any other market, escalating the company’s criticism of the president’s trade war.

“U.S. steel costs are more than anywhere else in the world,” Joe Hinrichs, Ford’s president of global operations, said Monday at an event marking the start of Ranger pickup production at a factory west of Detroit. He added that Ford is talking to the administration about the tariffs: “We tell them that we need to have competitive costs in our market in order to compete around the world.”

Bloomberg goes on to note that last month Ford CEO Jim Hackett said that the trade wars have already eaten a billion dollars off of the company’s profit, and that’s with most of its metals already sourced from the U.S.

This is what winning feels like.

2nd Gear: The Ford Ranger Won’t Steal Too Many F-150 Sales, Ford Thinks

This is mostly unrelated to the previous gear, but while we’re here talking about Ford, let’s be here, in the moment, to talk about Ford.


Ford doesn’t think the new 2019 Ford Ranger will eat too much into its goose that lays golden eggs, the Ford F-150.

Also, it came from the same person, Joe Hinrichs, the aforementioned head of Ford’s global operations, speaking at the same event, but this time to a different publication. From Automotive News:

Ford Motor Co. doesn’t believe the midsize Ranger will steal much business from its profit-generating full-size F-series trucks when the smaller pickup returns to North American showrooms early next year.

“There always will be some substitution, but this is more of a lifestyle vehicle for people who want to use it for different purposes,” Joe Hinrichs, Ford’s president of global operations, said Monday at an event celebrating the Ranger’s expected start of production here next week. “The F-150's gotten bigger over time and more expensive. We believe there’s room now to slot the Ranger in very nicely in the showroom.”


While the new Ranger won’t exactly be cheap, starting at around $26,000, its big sibling, the F-150, has gotten so monumentally huge and expensive that Ford doesn’t think they’ll eat into each other too much.

Okay, okay, so “monumentally huge and expensive” means it’s got a base price of around $28,000, just $2,000 more than a Ranger, but Hinrichs is right. They’re different trucks for different people. I’m sure Ford will be fine.


3rd Gear: Dyson Wants to Build Cars in Singapore (?)

Dyson, the company that makes the vacuums and the weirdly over-powered bathroom hand dryer things that just spray water everywhere, also has a multi-billion dollar electric car program, in case you forgot. They want to build three electric cars entirely from scratch, and they’ve already made the crucial step of being very British and getting an old World War II airfield as a test track.


Dyson hadn’t yet said where it was going to build cars, if it ever does. But CEO James Dyson is a prominent Brexiteer, so in keeping with that Patriotic™ theme, you’d expect it to be built by striking coal workers in Yorkshire or something.

But no.

The cars are going to be built in Singapore, the Guardian says:

The British manufacturer chose Singapore because of its proximity to “high-growth markets” in Asia, the chief executive, Jim Rowan, said in a memo to staff on Tuesday. The plant will be completed in 2020, with the car to be launched in 2021.


The Guardian goes on to say that Dyson already has a plant there, so it makes some semblance of sense for the company.

4th Gear: A Private Equity Firm Buys Magnetti Marelli

Magnetti Marelli is a parts supplier owned by Fiat Chrysler Automobiles. Or rather, it was owned by FCA, because now it is own by private equity firm KKR, through Calsonic, Reuters reports:

Japan’s Calsonic Kansei, owned by U.S. private equity firm KKR, has agreed to buy Fiat Chrysler’s Magneti Marelli for 6.2 billion euros ($7.1 billion) to form the seventh-largest independent car parts supplier.


Congrats to all the rich people involved.

All the workers.... eh.

5th Gear: BMW Recalls Diesels Due To Risk Of Fiery Death

If you own one of these cars, please get it fixed. Fiery death ain’t nothin’ to play around with.


Reverse: Surely This Can Never Happen Again (It Will Happen Again)

On this day 89 years ago, the stock market completely tanked, kicking off the Great Depression. Obviously we’ve all learned our lesson since then.


Neutral: What Should Cars Be Made Out Of?

Clearly, steel is out of the question. It’s too expensive. I propose we make them out of wood. Wood can be a sustainable resource if harvested properly, and Morgans are good cars. The logic of this argument cannot be defeated.

Deputy Editor, Jalopnik. 2002 Lexus IS300 Sportcross.


Future next gen S2000 owner

When you place a tariff on an imported good, local manufacturers raise prices to match and pocket the profit. They don’t keep prices low to gain a competitive advantage.

This is taught is Econ 101. You’d think someone who is supposedly good at business would realize this.