Trump touts new US BMW factory. But that’s not happening

Posted at 9:36 AM, Nov 29, 2018
and last updated 2018-11-29 13:32:49-05

BMW is considering building a second plant in the United States. President Donald Trump is heralding that as proof his trade policies are creating American manufacturing jobs, but BMW says its plans date back years and remain uncertain.

The German automaker said if it goes ahead with plans for a US engine plant, it is because it needs to supply engines to its North American assembly plants. It is expanding its existing US assembly plant and is due to open another assembly plant in Mexico next year.

BMW already operates its biggest plant in the world in Spartanburg, South Carolina. The company is adding capacity to its US plant, along with 1,000 additional jobs. The plant already employs 10,000 workers.

“We have talked for the past few years about an engine plant to support our North American production and sales and we are now again investigating this option,” BMW said in a statement. “In the future we will have the scale where a step like this may make business sense.”

The engines for the cars BMW builds in South Carolina are currently imported from Europe.

President Trump has threatened to impose tariffs on cars and auto parts imported from Europe or Asia. The duty could be put in place long before BMW builds an engine plant. It could raise the cost of the cars BMW builds in the United States, 70% of which are exported to other countries.

BMW builds more cars in its US factory than it sells in the United States. Last year, it imported about 250,000 vehicles for sale in the United States, while it exported 272,000 of the 371,000 X series SUVs. Those SUVs are the only models built in that plant.

Trump lashed out at General Motors (GM) this week, after it announced it will close four US plants, and eliminate 14,000 jobs, as GM shifts away from building weaker-selling car models. Earlier in the week he suggested that tariffs on imported cars could have stopped GM from shutting those plants by helping the sales of its car models.

His tweet about the BMW plant Thursday was premature in declaring that BMW has already decided to build the engine plant.

“General Motors is very counter to what other auto, and other, companies are doing. Big Steel is opening and renovating plants all over the country. Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!” he tweeted.

GM, and other US automakers, have opposed the proposal for tariffs on imported cars and parts, saying such a move would hurt its US employment. The automakers are particularly concerned because all cars built at US auto plants have a significant amount of foreign parts in them.

GM did not blame the threat of tariffs for this week’s plant closing announcement. It said it needs to save money to develop the next generation of electric and self-driving cars.

But GM did say last month it expects to spend $1 billion more for commodities like steel and aluminum next year. The price of those goods rose since the Trump administration imposed tariffs on those products in an effort to help US mills. Even US steel and aluminum producers have raised prices because they no longer face as much competition from overseas product.