Toyota's $1.33-billion investment in Kentucky is useless to Trump

President Donald Trump called a planned $US1.33-billion investment by Toyota in a Kentucky factory “
further evidence that manufacturers are now confident that the economic climate has greatly improved under my administration,” in a statement issued by the carmaker.

According to Toyota, $US10 billion will be invested in US operations over the next five years.

Unfortunately for Trump, while Toyota’s efforts make a good headline, they likely won’t help the President much with his fortunes in 2020.

The Japanese carmakers in the US have factories and employ workers overwhelmingly in the US South, a region that Trump carried convincingly in the election — no surprise, as the South has been reliably Republican for decades. Trump won 63% of the vote in Kentucky last November and Mitt Romney won the state by a wide margin when he ran against Obama in 2012.

Trump doesn’t need jobs, investment, or votes in Kentucky — he needs all those things in Michigan and Ohio, redoubts of the domestic US auto industry and states that are either election battleground territory or that have gone for Democratic presidential candidates in previous elections.

Toyota, of course, is happy to accept the President’s seal of approval, going to far as to include it in the press release for the announcement.

But Trump doesn’t get much out of the investment. Not would he from Honda, Nissan, Mercedes, BMW, or any other “foreign transplant” automaker in the US, all of whom have concentrated on expanding manufacturing in the South.

In truth, Trump hasn’t gotten much out of new investments by Ford, GM, or Fiat Chrysler Automobiles, either. Their investments were either planned long ago or relatively modest; no one wants to ramp up hiring or production in the US with the sales market running at peak levels.

By now, the automakers all know the Trump Games: run their businesses as usual, but makes sure that any hiring or investment in the US captures the President’s attention. In exchange, the automakers get relief both of regulations and taxes.

The problem here is that for Trump, the automakers’ moves have media value that far outweighs any practical economic impact. With US unemployment running under 5% and the auto industry anticipating a US sales downturn in the next 12-18 months, there isn’t going to be a surge of hiring anywhere.

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