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Volvo Shift Plans For Its U.S.-Made Cars Amid China Trade War: NPR



Tremaine Smalls attaches parts to an engine at Volvo's plant in Ridgeville, S.C. The automaker has shifted its exports to Europe as the result of the U.S. trade war with China.
                
                
                    
                    Camila Domonoske / NPR
                    
                

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Camila Domonoske / NPR
        
    

Tremaine Smalls attaches parts to an engine at Volvo's plant in Ridgeville, S.C. The automaker has shifted its exports to Europe as the result of the U.S. trade war with China

Camila Domonoske / NPR
            
        

Volvo is a Chinese-owned Swedish company making cars in the U.S. When it decided to set up a plant in South Carolina to build cars to the world, it was following a long tradition. With its port, Charleston, S.C., has been a shipping hub for centuries. And the state has been home to international manufacturers for decades – BMW, Michelin and Bosch are among the many global firms with footholds here.

But before the plant opened last year, President Trump transformed America's approach to trade policy.

Trump's trade war with China has stretched for more than a year, and trade tensions remain high with Europe as well . Tariffs on steel and aluminum are pinching auto suppliers in the US, which face higher costs for raw materials to make parts. Meanwhile, tariffs on imported parts can cut into the budgets of automakers, who rely on thousands of different components from around the world to build each vehicle.

Volvo, owned by the Chinese firm near Charleston to China, but the tit-tat tariffs between Beijing and Washington threw a wrench into those finely tuned plans. US-made Volvos aren't sent to China after all.

"It's kind of a disappointment, but we're going to work through it," says Trey Yonce, a supervisor at the plant, as he watches line workers. assemble cars. "It wasn't what we wanted to hear."

But as a note note, Volvo is adapting, not cutting back.

Analysts compare imposing tariffs to squeezing on a balloon. Put pressure in one spot and the global economy will shift to work around it.

Volvo's new $ 1.1 trillion plant in Ridgeville employs 1,500 people, and currently running at a fraction of its capacity
                
                
                    
                    Camila Domonoske / NPR
                    
                

hide caption

toggle caption

Camila Domonoske / NPR
        
    

Volvo's new $ 1.1 trillion plant in Ridgeville employs 1,500 people, and currently running at a fraction of its capacity

Camila Domonoske / NPR
            
        

Volvo's new $ 1.1 billion plant in Ridgeville, S.C. employs 1,500 people. It's currently running at a fraction of its capacity, manufacturing the S60, a luxury sedan. But Volvo has not stopped production because of tariffs. In fact, the company is still planning to add to SUV to the plant in the next few years.

And half the cars made in the facility are still being exported – just not to China. A batch recently went to Belgium, for distribution across Europe. In coming months Volvo says it will ship to countries in the Middle East, Africa, Oceania and Asia Pacific region – excluding China, of course.

The plant was designed to be flexible, handling gas engines, hybrids and eventually electric vehicles on the same line. Volvo's had to be flexible about where it builds cars and for which markets, too.

"We need to be able to change our manufacturing capabilities very fast," says Anders Gustafsson, Volvo Cars' vice president of the Americas and the CEO of Volvo Car USA. "We are fixed, but it's not easy."

But he takes the long view.

"To run a plant or run a company, it's a long-term decision," Gustafsson says. "So you lose and you win."

Across the entire industry, automakers are waiting to see the trade conflicts, says labor and manufacturing expert Kristin Dziczek of the Center for Automotive Research.

"Essential investments are getting made," she says. "Strategic investments are waiting to find out what the rules of the game are going to be."

And it's not just the car industry grappling with the unpredictable nature of these trade talks.

"I think that every industry has got some of them in the game or some things that get messed up when trade becomes uncertain," she says.

his state depends heavily on global trade. "We ought to be trying to lower tariffs, not raise tariffs," he says. "The global automotive industry could benefit from zero tariffs."


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