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Volvo sees Trump’s trade war as threat to production and jobs at new South Carolina plant

Volvo Cars has just opened a brand new plant South Carolina, that was expected to employ up to 4,000 people

Volvo Cars has just opened a brand new plant in Berkeley, South Carolina, that was expected to employ up to about 4,000 people. But with Trump’s tariffs war with China and the EU, those plans could be nipped in the bud. Volvo Cars is a Chinese owned auto company and views Europe as a major component of its operations and market.

Many of the cars produced in Berkeley are produced to meet the demands of foreign markets, such as in China or the EU. This triple pointed plan of production and marketing, however, can expect some serious and expensive issues if Trump’s trade spats maintain as they are, and perhaps even more so should they escalate any further.

Reuters reports:

BERKELEY COUNTY, South Carolina (Reuters – Chinese-owned Volvo Cars opened a new auto factory in South Carolina on Wednesday as company executives warned that the U.S.-China trade dispute could undermine plans to create up to 4,000 more auto jobs in the heavily Republican state.

“If you have trade barriers and restrictions, we cannot create as many jobs as we are planning to,” Volvo Cars Chief Executive Hakan Samuelsson told Reuters on the sidelines of an event celebrating the new facility.

The auto factory is the latest addition to several large-scale manufacturing operations in South Carolina, including a Boeing Co(BA.N) aircraft plant and a BMW AG (BMWG.DE) auto assembly plant, that rely heavily on export sales to support jobs.

“We want to export and if suddenly China and Europe have very high barriers, it would be impossible,” Samuelsson said. “Then you have to build the cars there. And then all cars will be more expensive, you have to invest more tooling and have every model in every country. That’s against all the logic of modern economies that trade with each other.”

Volvo Cars and its new U.S. factory illustrate the conflicts created by President Donald Trump’s proposals to impose tariffs of as much as 25 percent on imported vehicles and auto parts as a way to encourage more U.S. manufacturing and press trading partners to drop tariffs on American goods.

Volvo currently imports all the vehicles it sells in the United States. Rising demand for those imported vehicles helped convince the company, owned by China’s Zhejiang Geely Holding Group [GEELY.UL], to expand its investment in South Carolina to $1.1 billion and make plans to hire about 4,000 workers by the time the new factory reaches full manufacturing capacity.

Initially, the Volvo South Carolina plant will build S60 sedans, which currently are imported from Europe or China. Some of the U.S.-built cars will be exported to markets outside the United States, Volvo executives said.

The company has no immediate plans to build another model at the plant, company officials said. But if a decision is made to launch Lynk & Co vehicles in the United States, building them in South Carolina would be an option, Samuelsson said. The Lynk brand is co-owned by Zhejiang Geely Holding Group Co Ltd and its two carmakers, Volvo and Geely Auto.

Volvo has hired about 900 workers at the plant. It will need about 1,500 as production ramps up in the fall, said Anders Gustafsson, Volvo’s senior vice president for the Americas. “We need to speed up.”

If the U.S. imposes tariffs on foreign cars, and trading partners retaliate, that could could chill Volvo Cars’ plans to add jobs, Samuelsson said.

The state voted Republican, and now a Republican president is threatening more than 4,000 jobs in their economy while the tariffs which he is imposing also threaten to increase the cost of products which make use of the raw materials which Trump is levying tariffs upon, given the fact that America doesn’t produce enough steel or aluminum to meet the domestic demand, therefore importing a significant percentage of it, which is facing tariffs of 25% and 10% respectively.

 

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