Daimler CEO Says USMCA ROO Can Be Met Within Four Years
Daimler CEO Ola Kallenius told reporters that Mercedes-Benz's transition plan for auto rules of origin under the U.S.-Mexico-Canada Agreement will take three or four years. Kallenius, who was responding to a question from International Trade Today after a Q&A at the Washington Economic Club Jan. 10, did not say explicitly that the carmaker would be applying for the extension, which would require the company to show how Alabama production -- not just Mexican production at its joint venture with Nissan -- will meet the tougher standards. If it will take Mercedes four years to meet the standard, they would need an extension.
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“We have most of the components that we need, and we have a very comprehensive investment plan we have put together, our transition plan into USMCA,” he said, in response to ITT's question on whether the German automaker would have to add engine or transmission production in North America to meet the standard. “So we feel quite confident that everything that is needed in the next three or four years, we will be able to put that in place. But it is because we have been here 25 years, we have a highly value-added operation here already.”
About 4,000 to 5,000 parts arrive at the Alabama plant, where assembly of Mercedes SUVs happens.
Kallenius said higher tariffs on American cars imported into China has not slowed production at the Alabama plant. He said his company is one of the largest industrial exporters to China from the U.S. “We have been growing in China. I visited our Alabama operations yesterday, and we are ramping up production as we speak,” he said.
Kallenius said that Daimler doesn't like tariffs “because of course, we rely on global supply chains in every direction. Global open markets are very important to us.”
Kallenius did not talk about the longer transition period for heavy trucks, which will need to have 70 percent North American content. Mercedes has the largest market share in Class 6 and Class 8 (the largest) trucks in the U.S., with 40 percent of the sales for Class 8. Daimler trucks are sold under the Freightliner brand in North America; the company has assembly plants in North Carolina, Oregon and Mexico, as well as a chassis plant in South Carolina, and a new cargo van plant in South Carolina that is still ramping up.
“A quarter of our revenues worldwide are in the United States, and we employ 27,000 people here; this is an important market, and we're going to continue investing billions in the United States,” Kallenius said, in response to a question on whether the rewritten NAFTA could be credited for expanding production in the United States.