AAH #808 - Will Trump Really Let Chinese Automakers Into America?

0:01Auto Line After Hours is brought to you by Bridgestone Tires, solutions for your journey. And by BorgWarner. The automotive industry continues to evolve and so do the opportunities to define it. BorgWarner, one of the world's most admired companies, gets partners where they need to go. Let's do something big together. Everybody, thanks for joining us on Auto Line After Hours. Gary Vasilash is out today. He's actually in Chicago. He's a speaker at the Machine Tools show that's going on there. He'll be back next week. But we've got Joe White from High Speed Rodeo. We've got Liam Rapoli from the Detroit Free Press and Sean McElroy from Outer Line.

0:43So and we also have a lot of great news to get into. We may as well get started. Joe is the Trump administration. And this is what everybody in the industry is talking about. Is the Trump administration really going to let Chinese cars into the American market? Well, not if, let me see if I can get all the different constituencies. Not if the National Auto Dealers Association, the Democrats and the Republicans who represent auto states in Congress, the Alliance for Automotive Innovation, which is the lobby that represents pretty much all the major OEMs, I think, except for Tesla automakers in the country.

1:22I could go on. I mean, there's a, so the thing that has spooked everyone just to, you know, is that President Trump, and I don't remember the venue in which he was asked this or said this, but President Trump has once again said that if Chinese automakers, you know, BYD, Geely, want to come build vehicles in the United States with American workers, that he would welcome that. And it would be great. And he compared it, you know, he pierced some history of the auto industry compared to the Japanese, the Koreans and the Germans coming into this country, setting up shop, you know, replacing imports with U.S.-made product.

1:59This is, you know, this has really spooked people. By the way, let's just say Geely actually does build vehicles in the United States. It cleverly disguises the Volvo plant in Charleston, South Carolina, which I've seen a number of times. It's a nice facility. But everybody else in sort of the automotive, U.S. automotive incumbency establishment does not want this to happen. And it has spooked folks that Trump is open to this. And what they would like, and I think I'm, you know, what they would like is if they can't get him to stop saying that, you know, periodically, at least keep it off the agenda when Chinese leader Xi Jinping is here, what, in a couple of weeks or 10 days, something like that.

2:43Right. That's right. Anything you guys got to add? You know, it is, especially when it comes to the automotive industry and things Trump says, it always feels like a gamble, just on what you believe. I think, you know, the idea of it sort of matches his tariff policy, which is sell here, build here. it seems sort of par-fetched to me considering how many people would have to be on board with this, especially the strong automotive lobby in the United States but it has always been unpredictable, so I don't know Yeah, I think the thing is, what's interesting about it is one, that he says this stuff during a midterm election campaign where one of the key races that Republicans want to win and need to win is in Michigan and actually there's one in Ohio too.

3:38I mean, there's both in Ohio and Michigan. I may have missed one, but those are the two for sure where Democrats have a shot at winning in Ohio again, Sherrod Brown, that's neck and neck here in Michigan. But the point being, that's not, sort of being pro-China is not what you wanna necessarily broadcast to people who depend on the auto industry for their living in those states. Yeah, and the thing about Trump, though, and I think this may be where he's coming from, whether he intends it or not, is that if a Chinese automaker, besides G. Lee Volvo, decided to invest in the United States, where do you think they would invest?

4:18Non-union, southern states. Red states, exactly. So he may be thinking, well, this would be great for some red state that would get this investment down the road. But again, as you said, I mean, the incumbent auto industry position and the dealers are now on board with this is we don't want Chinese cars imported to this market. It's existential. We don't we don't. I think the legislation in Congress or at least one of them, you know, basically is we don't want them built here. We don't want anything to do. Right. Nothing. The answer is no. The answer is no. And so, yeah, we'll see. I mean, I hope we all get to come back in five years and see what actually happens.

5:01It's interesting to me, too, that the greatest proposition about Chinese vehicles has been that they are so cheap. I mean, there is the software element of it, and they move at China speed and can produce them. But really, it is the price tag. If they're building these cars in the U.S., do you expect them to be as cheap as they are in other parts of the world? I mean, obviously not, right? Well, they can't bring any of their connectivity tech. I'm pretty sure this bill that you're talking about, Joe, is going to go through Congress. It's got bipartisan support. It does, yeah. And it essentially says, look, if you've got Chinese hardware or software that has anything to do with connectivity, forget about it.

5:38You can't use it in this country. And, you know, the Chinese have a great, I mean, they've got the best supply chain in the world. Are they going to be able to import all that stuff? No, it's all tariff. So to your point, Liam, no, you can't build Chinese cars here as cheaply. But again, as I know you remember, you may not firsthand. That is what people said about the Japanese companies in the 1980s. Make them come on shore. They'll never be able to figure it out. They'll have these nasty old UAW to deal with just like we do. They'll have the expensive parts just like we do, et cetera, et cetera.

6:18And we all know what happened was that Toyota brought their system here. Honda brought their system here. Sure. I mean, I imagine, you know, one, they brought their own suppliers here who created jobs in the communities and were welcomed for doing so. Then they also, Toyota certainly did this. I know I wrote about it. Toyota also went out and said, OK, fine. You know, we'll train some of these American-based suppliers to do things our way. And they successfully did that. And there's, you know, Shad Khan, who owns, I can't remember which football team, the Carolina Panthers. I mean, he started out as a bumper maker for Toyota.

6:52they trained him how to do bumpers the Toyota way and now he's a billionaire so I mean that is probably what the Chinese are thinking is like if you give us a shot you know we can we can bring on shore our suppliers we can train others or you know meld mind meld with the other suppliers do just like the Japanese did except do it half as quick yeah but I don't think you know the Japanese it seemed like they came in and started building their own plants too but it's nice to think that they might, Chinese might go down south and build a plant there. But what we've seen them do in other parts of the world is partner up and take unused capacity from other automakers that it's unused capacity.

7:32They're not doing anything. Well, right. And right. They may do that. I mean, BYD did, I think is doing that, or I know is doing that in Brazil. But in fact, um, BYD and Brazil took over an old Ford plant and, um, they're just, they're just now in the last few months starting to produce vehicles there. And if I remember right, um, they're gunning for, I think 50 % local, you know, Brazilian or South American local content, fairly short order. So I look at that and I say, okay, well, anyone who says they can't do that. And they're, I think they're doing similar in Europe, by the way. Um, anyone says they can't do that, maybe underestimating them.

8:13Yeah, don't underestimate them. The point that I think Trump gets totally wrong and anybody thinking that way is, okay, let's say you let the Chinese in here. Oh, you're creating American jobs. Yeah, really? Where are those cars going to get designed? In China. Okay, you just lost all those designers. Where are they going to get engineered? In China. You just lost all those engineers. Where is all the manufacturing engineering going to take place? China. Where are all the components going to be designed? China, et cetera, et cetera. So you pick up some line worker jobs. That's it. And now you've just lost all these high value jobs.

8:50Initially, yes. But again, I mean, I sound like I'm sticking up for the Chinese. I guess I am. I guess what I'm sticking up for is the idea that you can build, you can build, you can add production and engineering as a non-US automaker. I mean, the Japanese brought engineering here. I mean, it didn't happen immediately. You're right. In the initial years, yes, in the initial years, you're 100 % right. A lot of that intellectual work will be done in China. But it's not that it can't be moved here. I mean, Honda and Toyota and all the rest all have engineering centers here. Honda and Toyota, I keep picking on them because I think they have the most developed North American, you know, engineering and production systems.

9:34Could the Chinese do that? Sure, they could. Could they promise to do that as a price of entry? Sure, they could. You know, anyway, it'll be interesting to see what happens because, you know, Ian, Trump may spend the whole time trying to figure out whether AI is going to kill us all and not get into the auto industry at all, which would be perfect as far as the constituents would be concerned. But, you know, interesting. And maybe, Sean, you talk about this. Toyota telling its dealers what? Oh, yeah. Toyota asking its dealers to help lobby against tariffs because tariffs are absolutely killing them in the North American market right now.

10:11They're losing money here. Dillions. Yeah. Here's a Japanese company saying, please, get rid of the tariffs. I thought that was kind of interesting. Yeah, yeah. But they speak for multitudes because there's not a one of these companies. that isn't going to be hurt, isn't being hurt by tariffs. You can speak to Stellantis for more. Absolutely. And if these Canadian tariffs go up to 50 % in January, I think that could be cataclysmic for these companies. Absolutely. And all the supply chain that goes along with it. Dealers have pretty strong lobbying groups too. You know, they're very heavily involved in politics and I should say politicians involved in dealers.

10:58So, yeah, you know, it kind of makes sense that they would go towards their dealers and ask them, like, hey, help us out here. Yeah, there's Toyota plants in I forget how many states, but it's not 50. But there are Toyota dealers in all 50. And practically any single congressional district is probably at least one big Toyota dealer. So, you know, and they donate and they create a lot of jobs. So the phone calls get taken. Yeah. Here's the crazy timeline that I put together over this thing about allowing Chinese in. On August 9th, so a little over a month ago, the White House put out a press release bragging that Ford was going to onshore the Lincoln Nautilus.

11:40On August 31st, the White House put out another release bragging about all the jobs that it was creating and singled out for praise the Ford Motor Company for building batteries in Michigan, investing $3 billion and creating 1 ,007 jobs. A week later, September 8th, Secretary of Transportation Sean Duffy comes out and excoriates Ford for taking too long to onshore the Nautilus and just rips into them for working with a Chinese company to build batteries. Then this week, Trump comes out and says, yeah, we'll let the Chinese in. No problem. What the hell is going on in this administration? I still I don't understand the Sean Duffy coming out against Ford.

12:29It makes absolutely no sense. Just for your point with, you know, before and after that, the Trump himself is coming out. And, you know, I think the first time it was a letter that was put out with Trump's signature on it, you know, praising Ford for building the battery plant in Michigan and adding all these new jobs. And then, you know, after Sean Duffy says that, he comes out again and says, hey, yeah, we're open to the Chinese coming and manufacturing here. And so it's, are they not speaking to one another before any of this is going? Like I said, it makes absolutely no sense to me. Yeah, I mean, I look at that and it was interesting to me that Ford put out a pretty tough, very tough.

13:15They punched back. hard on Duffy, which is not something that we've seen a lot of from automakers over this last couple of years, even as they've been kind of punched in the teeth by tariffs and had to write off billions because of the EV policy pivot or whiplash and lots of other things that didn't go their way. And to see Ford basically say, you're just trying to, I mean, I think this very close paraphrase what they said, you're just trying, you're misinformed, you're just trying to grab headlines, you know, back off, bud, to their top, or one of their top regulators, right? A guy who could, if he were so inclined, find lots of reasons to give Ford problems, you know, oh, we're going to do an investigation on your safety, or we're going to do this or that.

14:01So, yeah, that was interesting to see. And it does speak of a little incoherence, perhaps. Yeah. Yeah. Yeah, perhaps. Okay. So we've beat that topic enough. Five bucks a gallon, man. Are we going to see five bucks a gallon across the country? I know California is already at five bucks a gallon. So are some of the other places on the West Coast. But Liam, what do you think? Yes. I really think we are. I mean, John, I was going to cancel on you today because of how much it's going to cost me to drive up here.

14:35The price of gas is ridiculous. It is this great consumer indicator. It is so closely tied to approval. And it just feels like it's going up. I don't think that there's going to be, and I'm not a geopolitical journalist, I cover autos, but I don't think that there's going to be an immediate resolution in Iran anytime soon. It just does not look that way. And without that, I think that we're just going to keep climbing. Even the Trump fuel stations that were at$3.47, they had to boost their prices up to$3.57. I mean, nobody, not even the artificially shrunken prices can hold it. So I do think that we're fastly approaching$5 a gallon.

15:27And I hope I'm wrong. Yeah, but I think you're right. And the way I look at it, it's like you've got four horsemen of the apocalypse for the automotive industry. And maybe there's like a bonus horseman in it. You've got rising, very high gas prices. You've got rising interest rates now. The Fed has pushed up interest rates and is very likely to keep pushing over. No, they're not at any sort of a record high, but they're rising. That's not great. That's never a good environment. You've got consumer confidence in the basement, and by most of the surveys, that's usually a bad indicator. And then this is kind of the new horseman, which is, again, we're back to the trade policy issue and supply chain costs.

16:13which in a way are related to the fuel costs because all the diesel trucks that are just in timing parts to all these factories are now paying six plus dollars a gallon. So, yeah, and it's draining kind of – it's draining consumer budgets. So, you know, sort of this – So there's a lot to be concerned about, I think, for the auto industry. And the gas prices are just kind of like just one of the indicators that they have to be launching. Totally agree. that that's going to be a real kick in the teeth you know last month car sales in the u.s fell by more than six percent that's that's a pretty sharp drop yeah well and now since then gas prices have gone up more uh interest rates have now gone up uh this doesn't look out for the rest of the year right well and if you get in again i mean it the past nine yeah nine more no eight months eight months.

17:08We don't know what fully, what September is going to be yet, I guess. But past eight months, it's kind of, you know, it's done the Wile E. Coyote thing of like, you know, we're hanging over there. But it stayed aloft. I guess the question, you know, maybe volume overall doesn't go to the floor, but if you get a significant mix shift, and I know this is something that the auto and people are watching very carefully, you get a significant mix shift away from large trucks and away from large SUVs toward hybrids, which that's happening. Towards hybrids is already happening, but towards smaller vehicles.

17:43Again, not so great news for the Detroit automakers, and especially Stellantis, which has gone whole hog. They've gone the complete opposite direction with their mix. I mean, they had this goal to be, I forget exactly what it was, but either, I think it was fully electric by 35, and they completely undid that in May and said, look, we have this beautiful mix now that's going to give our consumers the freedom of choice. This is their chosen tagline now is the freedom of choice. And your choices are a V8, a straight six, a V6, you can get one hybrid Jeep Cherokee. Or the EV Dodge Charger, which isn't really being built.

18:32No, no, no. So Stellantis has really put themselves in a strange position where they're taking advantage of the current CAFE regulations. At first, when they were like, yep, we're putting the Hemi back, and people were clamoring for it, even though it is a worst-performing engine by most metrics compared to the straight-six, it seemed like, okay, well, Stellantis was ready for this. And I heard that they knew that this was coming and prepared for it, and so they were like, we're going back to gas guzzlers. Here we are a couple months out, and that looks to me like maybe that was a mistake. Yeah, I mean, you say that.

19:16It seems more like Stellantis is undoing the things that were done under Carlos Tavares, Because, you know, now bringing the Hemi back and stuff like that, that seemed kind of almost like obvious things that they should be doing. So, yeah, that's. Yeah, but I think the whiplash problem that the industry has, the auto industry has, it's pretty serious. So on the one hand, first, it's Joe Biden says 50 % electric by whatever it was, 2035, 2032. They invest billions of dollars to try to, you know, get ahead of that mandate. then Trump and the Republican Congress say, no, forget that. We don't want any, you know, we don't want you to do that.

19:59And by the way, a lot of their customers didn't want them to do it. So fine. So they trash all those investments, burn them up in the barrel, go back, as Liam said, go back to combustion, bring back, you know, get the moles for the V8s out of the barn. Now all of a sudden it's, oh, guess what? We're going to have a gas price shock created by, you know, Trump's war in Iran.

20:22it's just it's hard it's not healthy I don't think with the tariffs and now this I don't think that this sort of industrial ping pong can go on without some decisive action I don't know what that is and we'll get to this later on but Unifor who is also the Canadian auto union which is also in the middle of all of this is really struggling and their game plan and the contract that they just negotiated with GM and what they're trying to do in some really heated discussions with Stellantis right now is just wait. Just wait it out. They just want time. And so with GM, they negotiated to keep CAMI, an assembly plant in Ingersoll, Ontario, open.

21:04They're not going to sell it. They're not going to close it. They're just going to hold on to it. Are they going to build anything in it? Look, I think everybody's waiting for the Trump administration to end and then see what's really going to happen. So you've got to wait another two years. Two years plus. Which seems like an eternity. It is an eternity. Yeah, it's an eternity. I mean, an eternity, especially in an industry that's focused on what happens next quarter. I mean, there's a lot of quarters before you get to that two, two and a half years before you know what's really going to happen.

21:34So to me, it's an incredible. But here's a question for you guys. Is five bucks a gallon going to be the trigger to get Americans to go, you know what? Maybe that electric car don't look so bad. Or that hybrid car. Well, the hybrid, they're already there. Yeah, already there, but you push the mix of electrified vehicles total. I guess we can call them NEVs here too. Me? I mean, I just drove across country with an F-150 and towing a travel trailer. I'm as conscious of gas prices as I've ever been. And you get into, I mean, you go from state to state, and I was literally planning my stops. okay, we stopped for the night in Spokane, headed east.

22:21And I said, I'm not buying gas in Spokane, Washington, because the price for regular in the state of Washington is$5 a gallon. It's over that. And then you get into Idaho and it's 30 or 40 cents less. So I bought all my gas in Idaho. Anyway, point being, it's already$5 a gallon in many parts of the country. I swear I just passed a gas station somewhere around here that had like$4.99. Yeah. No, we're knocking on the door of$5. And the headlines out of the Middle East are, every day is a different headline, but it seems like, you know, at least near term, there's going to be a lot of disruption.

22:58And yes, I do think that$5, I mean, I used to think, you know,$4 a gallon, and it used to be true. I think in 2008, right, we went to$4 a gallon. And everything went to hell like on the spot. Now I think it's$5 a gallon in like the heartland, you know. The coasts are already there. And yeah, we'll see what happens. I mean, if it stays there for a while, I do think there will be a mixed shift. Well, here's the real danger too. You know, if gas prices rise slowly, it's a boil the frog slowly kind of a thing. Consumers don't seem to react too much. But if gas prices go up quickly, which is what they're doing right now, car sales take it on the chin immediately.

23:43Yeah. No, I mean, I think, Sean, you said this. I mean, I think the rest of this year and the first quarter of next year are going to be a real test. You know, the president has promised us all that gas prices are going to drop like a rock after the election is over and the Iranians surrender. OK, let's see. Let's see. Right. I don't think it's going to happen. Yeah, I think it will help EV sales, but how much? I mean, we've seen all these automakers pull back on their EV plans. Now might be the time to have them, but it seems like we're getting more of just these trim lines that are coming on to existing models more so than we are having new models coming in right now.

24:28And I don't know that the EVs that we have on the market are super compelling to get someone to go away from their ICE vehicle. at least completely. You know, look, five bucks a gallon is a real psychological barrier, I think. And to hit that, people are going to be in shock. And I'm not saying that I think we're going to see EV sales rocketing up, but I think you're going to have a lot more people out there kicking tires and trying to decide. And, you know, I want to say last month EV sales, and it's mainly Tesla who's the beneficiary of this, but they were about 100 ,000 units. So if that were to be annualized, you're talking about 1.2 million EVs with no subsidies, which is almost where they were with subsidies.

25:16So I'm starting to think we've bottomed out as far as EV goes and we're going to only see it go up from here. I'm not saying rocketing up, but I think we're going to see a lot more people buying EVs. Yeah, and it's funny enough, Joe, this may be a thing you had brought up the last time you were on. And even Anthony in the comments section here had something along the lines of, you know, Trump comes in and kills all these EV mandates and all that. And now all the different actions that the administration has done, it seems like they might be pushing people towards more EVs. Well, yeah. Yeah, I mean, and I think the withdrawal of the consumer subsidies, I mean, this is the, I mean, if you're a Republican or a conservative or a free market conservative, that's the phrase I'm going for, free market conservative.

26:08You know, you were against EV subsidies because they're distorting the market. Let people decide what they want based on the merits of the product. Okay. And the environment that they're buying in. Well, the environment has changed. So the environment is now pro-EV. The economic environment, the energy environment is now pro-EV. And people can make their own choice and let's see what happens. But I agree. I think sales of electrified hybrid and EV vehicles, I'm starting to look at those markets as more or less, they're not the same quite, but I think it's the same idea, which is I don't want to spend so much money on petroleum fuel.

26:49I want to decouple from that dependency as a person. And, yeah, I think if you have a sustained period, now we're six months plus into that, people are going to make those choices differently than they would have done if gas had stayed under$3 a gallon. That's how I see it. And, you know, I think for anybody who can plug in at home, they're going to do the math very quickly, and they're going to find out, you know, that Model Y, is about a buck 50 a gallon to fill up the tank, so to speak, versus the five bucks I'm paying at the pump. That's a big delta. Yeah, well, and the Wall Street Journal just had a piece where they, and I forget, I think it was Ryan Felton, but it was the Wall Street Journal for sure, had a piece where they looked and, you know, Tesla's, you know, regaining share in, I mean, in the electric vehicle segment.

27:43People have forgotten, or some people have forgotten, that they're angry at Elon Musk for his political action. They might get angry again. He's spending money in the election here in Michigan. I saw a Tesla in Oregon that had a bumper sticker on it. This is a Tesla in Oregon saying, deport Elon. You've got a lot of cognitive dissonance out there. Love the car, hate the man. out there. One sort of thread on that, though, is that the sort of push to EV was not explicitly, but sort of the subtext of it was a little political, right? It was, if you care about the environment, maybe this is something that you should look at.

28:28Gas prices, sort of apolitical. You know, and so that sort of gives another case in which EVs could, like you said, not skyrocket, but continue only upward. Well, yeah, it becomes an economic choice, you know, personal finance choice, what's good for me choice. Yes. And and I think, you know, I felt for a long time that that EVs would would thrive only when they kind of tick that box. This is actually good for me. This is a smart choice for me and my personal finances and or kind of what I need, you know, what I need to do. I mean, and yeah, I think you're right. I mean, I think when you get gas prices high enough, people can do the math and say, yeah, this is actually a better bet for me.

29:19And the price difference between new EV and new ICE is getting closer and closer. And the thing that I want to watch is sales of used EVs because you can pick them up pretty cheap. That's not a bad, that's not a hard decision to make. Well, and the other thing that's happening with EVs, maybe not so much the older ones, but certainly with Tesla, is that sort of the functionality gap, if I can make up a phrase on the spot. The functionality gap is narrowing. I mean, does it take two hours if you're on a road trip to charge an EV? No, it's well under that now. And the newer the EV, the faster that is.

29:54So that goes away as a problem. You know, range is kind of away as not so much a problem for most people. On and on, right? I mean, the new EVs, the newer the EV, or the more Tesla it is, for the most part, the less there's kind of like arguments why I shouldn't have one. And you can do OTA updates to make it better too. Right. So it's not only functionality, but technology-wise. Yeah. So anyway, I agree that I think the$5 gas propels that or accelerates that. Yeah. Hey, look, we've got to take a quick commercial break right now. Give a shout-out to the sponsors of this show. Making a life full of memories, one road trip at a time.

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30:47The automotive industry continues to evolve, and so do the opportunities to define it. BorgWarner, one of the world's most admired companies, gets its partners where they need to go. Let's do something big together. Thank you, Bridgestone and BorgWarner. We very much appreciate your support because now we can have discussions like this. And Liam, I got to ask you, you wrote this article in the last week or two or something like that. You interviewed three 80-year-olds, 80, 8-0-year-olds who are still working at Stellantis. I didn't even know you could work. Tell the story. And they're working at Stellantis, not just in a white-collar job, in a blue-collar job.

31:32I talked to a guy, Charles, who's still running the furnaces down in Kokomo at the transmission plant. and this was a story that sort of came to me because I heard from somebody at Stellantis that at one of their upcoming town halls they were going to bring a number of, they recognized four 80-year-olds who work for Stellantis. One couldn't make it up to Auburn Hills. I got the chance to spend an extended amount of time with two of them. uh the third wasn't feeling so well um but uh they brought them up for the town hall that they did you know a company town hall and and uh recognize them they got to meet with the ceo antonio felosa and uh you know discuss their time and stuff and i think it's a nice gesture right but these guys are sharp and they're funny in the jobs that they're doing the other's a skilled tradesman um the jobs that they're doing make them happy uh but they i went up to auburn hills to meet with them and sat down and it was uh just like grandpa story hour they just went and and they were they were hilarious um i heard all kinds of crazy stories there was one time where charles the guy who runs the furnace down in kokomo uh one time one of his colleagues went off to dinner came back well fed and kind of tired forgot to light a pilot light that puts up a flame shield to keep oxygen out of the furnace.

33:04And he ran a carriage, you know, bucket full of tools and stuff. And it just blew up. And he said, nobody was hurt. And nobody, nobody really talked about it. But the guy who made the mistake was wearing a hairpiece and he blew his wig off. And so he's standing there. I mean, it's like a, it's like a cartoon, man. He's standing there with no hair. Wow. And it just, it was sort of remarkable to me to see that they were totally sharp and really happy with their jobs. See, what I was surprised about when I saw your story was, I thought you had to retire at age 65. Right. None of them like the word retire.

33:47They don't even want to retire. They don't want to. I mean, it's where they're... They love their jobs. They love their jobs. And they can still do them. Yes, and they can still do them. Yeah, I guess that's the key. That is. They're all union? Oh, yes. They're skilled trades, all of them, right? Yeah, I believe so. And so, you know, they're really comfortable in their jobs. And they were saying, this is where my friends are. At 80, you start losing friends. But if you can keep showing up to work, that's, you know, built-in friendship. And they've got good lives outside of work. Charles, the Kokomo guy, says that he's got a big plot of land and he's got a big diesel truck and he's got two Corvettes, which he made sure to whisper about so nobody at Chrysler heard him.

34:32He enjoys his time, but Ray Washington and Charles Ferguson, the two guys I spent the most time with, both said, I'm just going to keep doing it until I can. I admire that. So you didn't get the sense that they were doing this out of, like, I still need the money sort of deal. These guys want to work. No, they would have full pension. They have full pensions and in fact, Charles from Kokomo also, when he wasn't working the line in Kokomo, he would go and work at Kroger. He did that for 20 years and he's got a Kroger pension. He's got a pension from Kroger. So he's got plenty of money. This is not a money thing.

35:11First of all, these are extraordinary people. Let's just say that. Second of all, if I were Antonio I would deputize one of my white collar techie people to go download these guys' brains into an AI. Not only because this sounds like they've got wild stories. Thank God nobody got hurt within the wig explosion. But I mean, what? They've been doing this since the 60s or late 60s, early 70s. and they know everything about how these factories actually operate and what the failure points are and on and on and on. Downloading, I mean, yeah, like finding out what they know and keeping a record of them.

35:55Capturing. You need a digital clone of these guys. Yeah, make a digital clone of these guys. These are the kind of guys that can walk past a machine, stop, and go, oh, you better replace that bearing on the number three stanch, you know, because it's going to go. Yeah. So, I mean, it does go to something that I, when I watch these companies go through these periodic purges of their staffs, which is usually the white collar staff, because they can't really do that so much to the union. I mean, buyout union people, they don't have to take the buyout. But they do it with the white collar staff. And you do sort of wonder if you purge out everyone who's got a five or a six as the first digit of their age, you lose a lot of institutional knowledge.

36:35you know. Ford admitted to doing this earlier this year after they had won their much ballyhooed first place in initial quality survey from J.D. Power among mainstream car brands. I think they were third overall. They came out and said, look, to make this work, we had to bring back some of our, they called them graybeards, these sort of older folks who had seen really what it's like. And they said, you know, we tried to replace them with AI and we learned you really can't replace that human knowledge. And I think you're right that they ought to find a way to really download this. And especially one of, Ray Washington, who works at SHAP now in Sterling Heights, he has been on a tour of Chrysler plants.

37:32You know, he started out on Lynch Road. He was up in Plymouth. He was doing, you know, I mean, he was everywhere. He's been at Mac and Jefferson in, you know, three or four plants that have since closed. He's seen it all. And it doesn't matter how great your computer system is yet, you can't replace that. No, and I imagine, again, just based on that one story, you know, these folks have seen things that are never, ever, ever shown to senior management, or certainly not senior management, and probably never, ever shown even to a lot of the people. Plant management. Plant level management. They said they never talked about the Whig explosion.

38:11No, I'll bet they didn't. And, you know, I'll bet they didn't. And thank God they didn't have to. There would have had to been a safety right now. There would have been an investigation. They're protecting one of their buddies. Right. Even though he's bald now. And I'm kind of making this up just to kind of get to a point. I mean, probably, and I forget which one told you the story, but probably if you wanted to be serious about it, you'd say, well, we ought to probably devise a system so that this furnace cannot function if it's not lit up properly. Okay, okay. Yeah, but the point is he would know that.

38:46And somebody coming in, you know, fresh out of, you know, Kettering Institute, you know, with a degree would not necessarily know that. Anyway, it's just it's really interesting. No, no. So you triggered a thought. I remember years ago when Ford was building the Tempo and Topaz in Louisville, they went with a plastic fuel filler neck in the vehicle. First time they had gone plastic had always been steel before that. Well, you know, you've got to put a few gallons in the vehicle before it goes off the line, or you can't drive it off the line. And if the temperature and the humidity was just what it was, putting that nozzle into the plastic nozzle and pulling it out and putting it in, after a few hours, it builds up static electricity.

39:30And sure enough, they got a spark and kablammo, one of their vehicles blew up. It was an easy fix. They put a rubber strap on the gas nozzle, you know, from the tank, and that grounded it and no more. Okay. They built the temple in Topaz for years and everything like that. And then they retooled the plant for the escape to be built there. And damn, if two weeks or so into production, if there wasn't another explosion at the plant. And I thought, oh, Charlie retired. Yeah. They forgot about putting a rubber strap on. Right. Nobody ever asked this guy, like, how do you do this all day and not blow everything up?

40:09Well, I'll tell you how. And then, yeah, it's all gone. But I love your idea. You know, General Motors tried to do that back in the 90s. It was up in Flint or something like that. I think it was one of their engine plants where they do a lot of machining. And they had a guy that, you know, was Charlie who had been there forever, knew everything about it. and they were trying to capture all of his knowledge so that, like you said, when he retires, you don't take that knowledge out the door with you. Yeah, yeah, yeah. No, I think it's a tough problem. Your point about the Ford just realizing that at least current AI or then current AI was not up to that task is, yeah, it's really on point.

40:52I mean, these are complex operations and, you know, management is not always told what's really going on. And the people who do know what's really going on, you need to figure out how to get them on your side. So, Liam, another thing that you've been following is Stellantis in Canada and this Brampton plant. And while you fill in the details. Yes. So this goes back to 2023 when Stellantis in Unifor, the Canadian auto union, inked a deal. and Stellantis said, we are going to build the Jeep Compass in Brampton, Ontario. It's an automotive plant, pretty big one outside of Toronto, employs, you know, oscillates between 2 ,000 to 3 ,000 employees there.

41:42Essentially today, if that contract held, the third and final shift at that plant would be going online today. Unfortunately, it's been idled since 23, and there are no plans to build the compass in Brampton anymore. That's because in 2025, as a measure to skirt around tariffs, Stellantis took the compass and moved it down to Belvedere, Illinois. Now they're not so sure if they're going to build it in Belvedere. I still think they are, but they've stopped saying that publicly. In any case, they took product out of Canada to avoid tariffs and brought it back to the States. Unifor said, what gives?

42:18This is our contract you're messing with. You're messing with a lot of people's jobs here. And Stellantis said, look, don't worry. We'll figure something out. We're still committed to a manufacturing future in Brampton, Ontario. And then it went kind of silent and Unifor got upset. And now Unifor's contract is up. And they've negotiated a contract with Ford as the sort of model contract. And they did pretty well there. Then they went to GM and also secured a pretty, it's essentially the same contract. And then they went to Stellantis and said, look, this is what we want and keep Brampton open.

42:54Stellantis, meanwhile, has been shopping Brampton around and about a month ago landed on a seller, or a buyer. That buyer was not made public until late last week when the union came out and reports emerged, I think first from Bloomberg, that they're going to sell it to Rochelle, a defense contractor that makes armored vehicles. They do fleet management, but they're a defense company. And the contract was supposed to be decided on September 11th, last Friday. Unifor says they've reached an impasse. There is nothing that is going to convince them that they will sign a contract unless Stellantis says we're going to keep Brampton open.

43:44Stellantis, meanwhile, says, we're not going to keep this plant open. We want to sell it to Rochelle. Let's find a way to strike a deal. Is Rochelle, I don't know anything about Rochelle, they unionized operation? So I don't know about their whole industry. Rochelle has said, we will adopt those, you know, 2000 or so employees and bring them on. Unifor, Lana Payne said this morning, the national president, Lena Payne, she said that they would much prefer and wouldn't really accept defense jobs. They would prefer automotive jobs because they're much more consistent, right? The buyer is sort of always there.

44:24With defense, it's you need a government contract or else what are you doing? Volumes of cars that are so much bigger than - Exactly. Yeah. I mean, yeah, I would just, I agree. I mean, the defense plan may not employ as many people. Yes. Or certainly over time. Yeah, that's, no, it's really interesting, right? Because I mean, the sort of the, to me, the overarching problem is that Stellantis is kind of the location of the overcapacity in the North American market. I mean, they have two plants, right, that are basically empty. I mean, the Belvedere plant, I guess they've got to, they're going to build the new Dakota or whatever they're calling that.

45:00So Dakota got moved up to Toledo. Now they're building the Compass and the Cherokee is coming up from Mexico in Belvedere. Okay, so they're moving that to Belvedere, but that's not happening right now. No, and they just delayed that another year, so that's not until 28. Oh, okay, all right. So we should almost take them through the UAW contract where they promised the UAW they were going to put all kinds of jobs, I think, building electric vehicles in Belvedere. So they've got two plants that they've claimed to have product plants for, and maybe they do, but they're going to get to the end of each contract without actually ever having anybody work.

45:35Yes. Yeah, yeah, yeah. No, it's very challenging. It's very challenging. And it is sort of exemplary of what the tariff threats actually have done and can do. And, you know, Lana Payne said this morning that Brampton could be, she, I don't think she framed it as such, but Brampton could be the first auto plant to really fall in this trade war. And the way it looks right now, without a miracle for a uniform, it looks like that's what's going to happen. No, I think you're spot on with that. And then here's another thing is that Ford, and you'll correct me if I'm wrong, but Ford and GM have both said to Unifor, the way we're going to keep sustained jobs in our Canadian plants is build trucks.

46:29And I think GM said that they're going to put their heavy-duty pickups, medium-duty trucks, into Oshawa to sustain jobs there that otherwise wouldn't have a purpose. And I think Ford is doing the same. I forget which plant. Oakville. Oakville, which had no... That was supposed to be an EV plant, but then it wasn't. That's right. Is that right? Okay, got it right. Right. Both of those projects are definitely threatened by, at least on paper, by Trump's threat of a 50 % tariff. Because most of those trucks would not be sold in Canada. They would be sold back here in the United States. And if there's a 50 % tariff, they aren't going to be sold back here in the United States.

47:05There's certainly not that many. But here's why I think they'll stick to their plan. Yeah. Well, go ahead. Why? So they'll stick to their plan because GM and Ford are putting heavy duty trucks in Canada as a counterweight against the UAW. Because remember when the union shut down Ford's Kentucky truck plan. That was a big deal. I mean, that brought Ford to its knees. Absolutely. Absolutely. No, no, you're right. And so, you know, So this is where everyone's going to say, OK, let's sit in our hands. And when Trump goes away, things will get back to normal. But I think for the time being, you'll see GM and Ford stick with their heavy duty truck plants in Canada.

47:41I agree. Because, you know, it gives them great bargaining clout with the union, the UAW. Yeah, I agree. But I think at least on its face, they're also placing a bet that the Trump administration trade policies and the trade war with Canada that he's undertaken won't last. Maybe it won't last into next year. Certainly won't last past the end of his term. Right. That's the bet they're taking. And it seems like a reasonable bet. On the other hand, it's a very big bet. Well, look at Ford. They've already spent, I don't know, how many millions to retool that Oakville plant for the medium-duty trucks.

48:23Mm-hmm. They just got there. I mean, they're just ready to start building them now. They're not going to rip that up and send everything south of them. No, but if they're building it, so you know more, I'm not up on the details of their production schedules, but if they're starting to build or planning to start building now, at least on its face, the first of those trucks that they start building by early next year could face a 50 % tariff if they try to sell them in the United States. And that's a real problem. That is a real problem. That's exactly right. Now, why don't you think Stellantis would be willing to make that bet?

48:56Well, the honest answer is I don't know. But my second thing I would say is that they, you know, kind of back to what I said just a minute ago, they seem to be the owners of a lot of the excess production capacity in this market. Not by choice, but that seems to be what's happened to them. And, you know, I think it may be that they just don't see a way to economically build that much volume. Or they may, you know, they may say, well, look, we've got enough capacity for Ram truck in between Mexico and the United States. And oh, by the way, there are Mexican capacities under some threat from tariffs as well.

49:33Right. So that may I mean, I can just that may be it that, you know, and look, Tim Kaniscus is the most bullish executive and optimistic executive in the business right now. but maybe he couldn't assure Antonio. Like, yes, sir, I can sell 250 ,000 more heavy-duty Ram pickups if you decide to build them in Ontario. Maybe not. Yeah. I mean, if they thought they could, they probably would. That's true. I don't think they, they don't see that. No. Look, Antonio's got his hands full. You know, the U.S. is the last market where he can really make any money. You know, he's not going to make much money in Europe.

50:08They make peanuts in South America. They're losing, And they're practically out of China, except for their their work with Leap Motor there. So he's got to figure out how can he maximize profits in the U.S. And if Canada and Mexico have got to suffer, so be it. Not in an ideal world. This is not his choice. No, but he's got to look at the hand that he's been dealt. And, you know, Canada and Mexico, for the time being, are going to lose production because of that. He said last week, and I did not write a story about this, but I just picked it up and now it's becoming interesting. He said last week at an economic conference that he sees the automotive industry as split in two parts.

50:58And one is whatever is happening in the U.S. and the rest of the world. And I sort of think he's right to do that. But he also mentioned that perhaps the strategy may now be build in Mexico, sell in Mexico, build in U.S., sell in U.S., build in Canada, sell in Canada, which I don't know how you could meet volume with that sort of strategy. That's the question. One of them. Right. But it does seem like he's thinking about exactly what you're saying, which is how do you squeeze money out of these regions? And perhaps it is by avoiding tariffs this way and doing everything locally. But that's a big bet.

51:37It is a big bet. And here's another unknown that I'll throw out. I think in automotive news, someone, one of the editorial writers, the writers of automotive news a couple of weeks ago wrote a column saying, you know, how come the automakers aren't speaking up and saying more about, you know, all the challenges that are being created by the administration, Trump administration policy. I do wonder what things will look like after the midterms are decided and the auto companies, you know, and John Bozella at the Auto Alliance and all those folks see what has occurred and see who's going to be running Congress and, you know, in charge of Congress and see, you know, to what extent the president is solidified his position by, you know, keeping control, Republican control in Congress or is weakened because he has lost Republican control.

52:28control of Congress. And I think at that point, you may see the volume go up on the position that we all know the auto industry has, which is we like USMCA. We like having a North American scale supply network. We like being able to sell at North American scale, build to the point you just made about Stellantis' challenge. So yeah, it'll be interesting to see after the election, kind of how much chirping goes on about, you know, what is the right policy to have. I think you're totally right. I mean, and I think you'll hear louder voices, not just within the auto industry, but within the Republican Party, if they get their heads handed to them in November.

53:14No, I, yes, I think, I think, I think that is, I think that is, I agree with you about that. I think, you know, again, I mean, this may not age well, but if they lose, and if the Republican candidates lose in Ohio and lose in Michigan, you know, the postmortem may well be because those losses were released partly because of the stuff that we've spent the last 50 minutes or so talking about. Yeah. They win. Everything I just said will.

53:44They'll take that clip and escoriate. Yeah. Hopefully, hopefully nobody will notice. But anyway. Hey, one more topic I wanted to get into, and this sort of ties into Brampton maybe getting bought by Rochelle is what we're seeing here. We've been reporting on this in AutoLine Daily, this growing convergence of automotive and military. In fact, Liam, you were saying GM, you tell it. Yeah. So colleague of mine, Jackie Tarnaga, just wrote a story about, I believe it was this morning, recently, GM shipped off parts to Lockheed Martin to make missiles. And that's a development for this GM defense wing that has been fairly active recently.

54:27And that struck me as particularly interesting, which in this current political climate, the automakers are sort of turning to, or at least GM, Ford has sort of thought about it in And Stellantis is a whole different can of worms, as they sort of always are. But GM specifically is seeing some kickbacks from getting into the defense industry. What I was surprised to hear is that they're making missile parts. Because heretofore, GM Defense has been making vehicles. You know, the ISB, the infantry. I can't remember what the other is. Squad vehicle. Squad vehicle, right. Well, that's like, was that the retrofitted Colorado?

55:14It's like a modified Colorado. Heavily modified. So that makes sense. GM trucks are, you know, vehicles, blah, blah, blah. But when they say they're making missile parts, now this is starting to ramp up. I haven't seen the story. Did they say where they're making these parts? I don't think so. If they did, I don't recall. But I do know that GM's general tone was very protective because of the potential national security. I mean, I'm going to have fun saying a whole lot of things that I may have to regret later. Just don't show up next week and make me apologize for you. But I mean, let's not forget, I mean, General Motors has, you know, has engine plants, which are basically giant machining operations.

55:57And so, you know, if somebody said, can you machine, you know, certain types of parts to certain types of tolerances, GM has the equipment and has plants and people know how to do that, right? So, I mean, I think if you look sort of past the assembly plant operations, you look at sort of the transmission and powertrain where essentially it's metal machining. Machining, molding, casting. Machining, molding, casting. And if, you know, somebody says, well, you know, here's a mold, make a bunch of these, you know, GM and the other ones too, but certainly GM has the capability to do that. So I can sort of see where they would say, well, this is great.

56:36We soak up some, you know, to the extent that they have capacity can, you know, excess capacity there. I'm not sure they do, but if they do. And number two, kind of related to the stuff we've been talking about, if you're going to have some tough asks of the administration around trade and other types of policy, it sure helps to be able to say, you know what, remember, we don't just come up here asking. We do things for you. You ask us for military hardware, we say yes. I mean, that's how it's supposed to work. That's right. I guess. What I find interesting is it's not just here, it's happening in Europe as well.

57:14So you've got Volkswagen working with an Israeli defense company. Mercedes wants to be able to supply military trucks. Renault. What's Renault doing? Renault has. It was something else that they were getting. I mean. They had several vehicles that they were developing, and I think they were also getting into drones. Yeah. That's right. If I remember correctly as well. But, you know, we've seen some cool stuff. Ford had a six-wheeled version of the Ranger that they developed in Europe for their defense stuff. They could probably sell that to people here. Oh, yeah, absolutely. Yeah, yeah. Totally.

57:52I can see that. On Moab. Yeah, JLR had a flatbed version of the Defender that they put for their military thing. And let's not forget, I mean, look, there's precedent for this, right? I mean, this is nuts. I mean, the auto industry is, you know, World War II, World War I, you know, the kind of the intersection of defense production and automotive production is something that we've seen before. Yeah, I think JLR and their release, they're renaming their new military vehicle after their old one. And I think they said in their release at one point that they were the top provider of military vehicles for the British Army at one point.

58:30So, yeah, what greater industry to tap when you need more manufacturing volume? Also, in JOR's case, a useful way to make themselves indispensable as they struggle to survive in the retail market. That's right. Liam, you raised CHAP earlier, the Sterling Heights assembly plant. That plant was built to make rockets and missiles. Yeah, I think it's also interesting because even Daimler Truck was talking about bringing their defense operations to North America and trying to sell their vehicles to North American military companies. So, you know, it's not just regionalized. They're trying to expand this beyond borders as well.

59:17Yeah, this is something I think we got to watch because I think it's only going to grow. Yeah, I think that's I agree with you. I think that's right. I mean, I think to the extent that the auto industry, I mean, it's always been politicized and it's always been politicized, not just in this country, not just by the current administration, but in almost any country where there's an incumbent auto industry. The political class is very interested in what the auto industry is doing. And if you make yourself, I mean, I was joking, but I'll be more serious about it. If you make yourself indispensable, because now you're providing national security hardware, you're not just providing luxury cars for rich folks.

59:53well now you're in a different place when the politicians come around and you know want to you know demand this or that right hey look we're gonna have to wrap it up here before we go i do want to uh promote something that we're dropping tomorrow uh in fact all you remember all your all the out of line patreon members and youtube members you already know about this you got this a week ago uh and thank you for your support but publicly tomorrow we're dropping the first chapter of an 18 video series that we're launching that we did with Chris Theodore, all about what it takes to run a car company.

1:00:30I wish I had had something like this at the beginning of my career to lay out the roadmap of what goes on in this industry instead of taking decades to absorb it by osmosis. But check it out. We'll be posting that later tomorrow. But with that, Joe White, great to have you back here as always. Liam, great to have you here. Sean, you're already here anyway. Yeah, no, great to be on the show. And I want to thank all of you for having tuned in. AutoLine After Hours is brought to you by Bridgestone Tires, solutions for your journey. And by Borg Warner. The automotive industry continues to evolve and so do the opportunities to define it.

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