Volvo shifts plans for US-made cars in the context of China's trade war: NPR

Volvo is a Swedish company owned by China that manufactures cars in the United States. When she decided to set up a factory in South Carolina to make cars to ship around the world, she had a long tradition.

With its port, Charleston, S.C., has been a hub of shipping for centuries. For decades, the state has been home to international manufacturers. BMW, Michelin and Bosch are among the many global companies around the world.

But before the opening of the factory last year, President Trump has transformed the US approach to trade policy.

Trump 's trade war with China has been going on for more than a year and trade tensions with Europe have also remained intense. Tariffs on steel and aluminum weigh heavily on US auto suppliers, who face higher costs for the raw materials needed to manufacture parts. At the same time, tariffs on imported parts can reduce the budgets of automakers, who rely on thousands of different components around the world to build each vehicle.

Volvo, owned by the Chinese firm Geely, was planning to export many cars from the factory located near Charleston to China, but unpaid customs duties between Beijing and Washington have completely diverted these plans. Volvo manufactured in the United States are not sent to China after all.

"It's a bit of a disappointment, but we're going to fix it," says Trey Yonce, a factory supervisor, as he watches the assemblers assemble cars. "It was not what we wanted to hear."

But as Yonce notes, Volvo adapts and does not reduce.

Analysts compare the imposition of tariffs to the compression of a balloon. Put pressure in the same place and the world economy will change to get around it.

The new $ 1.1 billion Volvo plant in Ridgeville, California employs 1,500 people. It currently operates at a fraction of its capacity and manufactures the S60, a luxury sedan. But Volvo has certainly not stopped production because of the tariffs. In fact, the company still plans to add an SUV to the factory in the coming years.

And half of the cars manufactured in the factory are still exported, but not in China. A lot has recently returned to Belgium for distribution across Europe. In the coming months, Volvo has announced that it will ship cars to countries in the Middle East, Africa, Oceania and the Asia-Pacific region, excluding of China of course.

The plant was designed to be flexible and treat gasoline engines, hybrid vehicles and possibly electric vehicles on the same line. Volvo needed to be flexible about where it built its cars and for which markets as well.

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

But he takes the long run.

"Operating a plant or a business is a long-term decision," says Gustafsson. "Then you lose and you win."

Kristin Dziczek, an expert in manpower and manufacturing at the Center for Automotive Research, says automakers are still waiting to see how trade disputes will be resolved.

"Essential investments are made," she says. "Strategic investments are waiting to know what are the rules of the game [are] will be."

And it's not just the auto industry that is dealing with the unpredictability of these trade negotiations.

"I think every industry has its skin in the game or some things that are ruined when the trade becomes uncertain," she says.

Jim Newsome, CEO of the South Carolina Ports Authority, notes that his country is heavily dependent on global trade. "We should try to lower tariffs, not increase them," he said. "The global auto industry could benefit from zero tariffs."