Trump's Proposed Auto Tariffs Threaten Kia Plant In Georgia

Jul 27, 2018
Originally published on July 27, 2018 11:08 am

Steve Tramell remembers when the news got out in 2006 that Kia was planning to open a plant in West Point, Ga., population 3,700.

"The excitement in downtown was wild," says Tramell, the city's mayor. "The signs that were popping up in people's yards: 'Thank Jesus for Kia.' You know, things like that. It was really neat."

But these days, Tramell is worried. The largest employer in his town is under pressure thanks to President Trump's threat to impose tariffs on imported auto parts and cars.

Kia says it has invested $1.6 billion in the 2,200-acre West Point plant and surrounding community. The plant, along with nearby suppliers, employs 14,000 full-time workers. The area is known for producing the Sorento, Kia's midsize SUV.

The massive gray factory, with a red Kia logo emblazoned on the front, sits near the Georgia-Alabama border in what used to be farmland.

Textile plants were the main employers in West Point for decades, before they shuttered in the late 1990s and early 2000s.

"We've been through that down time," Tramell says. "We don't ever want to go through that again."

Tariffs would be "devastating"

President Trump surprised the world this week when he announced a detente on tariffs with Europe. But new U.S. tariffs on imported cars and parts still loom.

Those tariffs would hit Asian companies like South Korea-based Kia especially hard, and put jobs at risk in communities like West Point.

Kia's business could be affected by the tariffs in two ways.

First, importing vehicles into the U.S would be more expensive. Two-thirds of the vehicles Kia sells here come from other countries, like South Korea and Mexico.

Second, the company would pay more to import parts for the vehicles it makes in the U.S., including the West Point factory.

Kia declined requests for an interview.

But in an official filing with the U.S. Commerce Department, which is reviewing whether foreign auto imports are a national security threat, the South Korean company said import restrictions "would be devastating to Kia Motors and the many American businesses and workers it directly and indirectly supports."

The filing mentioned Kia's West Point plant specifically, saying auto tariffs would lead to a reduction in the number of workers employed there, at surrounding suppliers, and "hundreds of dealerships around the country."

It's this threat to jobs that makes auto tariffs so politically unpopular.

Democratic Sen. Doug Jones of Alabama and Republican Sen. Lamar Alexander of Tennessee introduced a bill this week to delay Trump's proposed tariffs.

"I've got homeboys out there"

Since he moved to West Point to be closer to his mom eight years ago at the age of 18, Des Carlisle has worked for Kia or its suppliers on-and-off for months or weeks at a time through temp agencies.

The starting wage is around $9 an hour, he says.

Most recently, Carlisle worked at the Kia plant, where his job was making sure people who painted cars had the supplies they need.

Carlisle worries that jobs cuts or a slowdown at Kia will make it more difficult for him to find work. And he's concerned what they would mean for his friends and family.

"I got a lot of homeboys that work at plenty of these plants," he says during a visit to a gas station down the road from the Kia plant. "The whole Kia Boulevard, I've got homeboys out there."

Carlisle wants to be a clothing designer full-time. He points to my dark-brown khakis.

"I could take them pants, and I could put some bleach on it man, and I could turn it into something completely different. Like I could put some designs on it, like whatever you want," he says.

But if he can't find work, and save up to pay for the supplies he needs, that goal will be harder for him to reach.

Carlisle says Trump doesn't understand how auto tariffs could hurt the community here.

Also at the gas station, Carl Michalski is on his way to work at Yanfeng Automotive Interiors, where he's a production supervisor.

The company makes door panels for the Sorento.

Michalski isn't worried about auto tariffs.

"It might get rough for a minute," he says. "But I think it's going to all work itself out in the best. China's going to come to the table and do what they're supposed it do."

Michalski says he trusts Trump to handle the international trade disputes.

Consequences for consumers

Auto tariffs wouldn't just affect workers, but potential car buyers too, especially for Kia.

Michelle Krebs, senior analyst at Autotrader, says Kia depends on sales of less expensive compact cars, and its customers tend to be younger, with less money to spare.

The compact Kia Forte, for example, is the No. 1 car owned by people with subprime credit, according to Cox Automotive.

"These are people who are really stretching to buy a new car," Krebs says. "Any kind of added expense is going to cause more people to fall out of the car market."

She predicts that would have consequences for Kia, and car companies like Hyundai and Nissan that operate similarly.

"If you add on the cost of a tariff," Krebs says. "[Kia] would lose sales, because it would be very difficult for consumers to afford even more."

Copyright 2018 WABE 90.1. To see more, visit WABE 90.1.

NOEL KING, HOST:

President Trump surprised the world this week when he announced a truce on tariffs with Europe. But the administration could still slap Asia-based carmakers with tariffs on imported auto parts and vehicles. Companies like Kia, which is based South Korea, could be especially vulnerable. It has factories in the U.S. Johnny Kauffman of member station WABE visited a Kia plant on the Georgia-Alabama border, where people are worried.

JOHNNY KAUFFMAN, BYLINE: Steve Tramell stands in the grass along Kia Boulevard, a four-lane highway in West Point, Ga. Tramell is mayor of the town, population 3,700. And these days, he's worried. The largest employer in his town is under pressure thanks to President Trump's threat of tariffs on imported auto parts and vehicles. Tramell looks across the road at a massive gray factory. Kia is written on the side in bold, red letters.

STEVE TRAMELL: As far as automobile manufacturing, we think it's a beautiful plant. It's got, you know, the Kia plants here and then Hyundai Mobis and then Hyundai Dymos, which are two of the suppliers, are directly to the left of it. It's a big, big facility.

KAUFFMAN: Kia says it's invested $1.6 billion into the 2,200-acre plant and the surrounding area. Tramell says in 2006, when Kia announced plans to open the plant, it was a big deal.

TRAMELL: The excitement in downtown was wild. The signs that were popping up in people's yards - thank Jesus for Kia (laughter) - you know, things like that. It was really neat.

KAUFFMAN: Today Kia says its plant in West Point and the nearby suppliers employ 14,000 full-time workers. Those jobs could be at risk from Trump's proposed tariffs. Kia would be hit in at least two ways. First, importing already made vehicles into the U.S. would be more expensive. Two-thirds of the vehicles Kia sells here come from other countries like South Korea and Mexico. And second, the company would pay more to import parts for the vehicles it makes in the U.S., like at this factory. Kia warns the tariffs would lead to job cuts right here in West Point.

Just down the road from the Kia plant, Des Carlisle is headed into a gas station. The 26-year-old is on a break from job hunting.

DES CARLISLE: Like, I just recently lost my job working out there - like, recently.

KAUFFMAN: Carlisle worked as a temp at the Kia plant. His job was to make sure people who painted the cars had the necessary supplies. Three months ago, Carlisle's contract ended. He worries any slowdown at Kia would hurt his friends and family.

CARLISLE: I got a lot of homeboys that work at plenty of these plants. Like, the whole Kia Boulevard, I've got homeboys out there.

KAUFFMAN: Carlisle says President Trump doesn't understand how auto tariffs could hurt the community here. Also at the gas station, Carl Michalski is on his way to work at Yanfang Interiors, where he's a production supervisor. The company makes door panels for the Sorento, Kia's midsize SUV. Michalski isn't worried about auto tariffs.

CARL MICHALSKI: It might get rough for a minute, but I think it's going to all work itself out in the best. China is going to come to the table and do what they're supposed to do.

KAUFFMAN: Michalski says he trusts Trump to handle the international trade dispute. Auto tariffs wouldn't just affect workers but potential car buyers, too, especially for Kia. Autotrader analyst Michelle Krebs says Kia depends on sales of less expensive, compact cars. And its customers tend to be younger with less money to spare.

MICHELLE KREBS: So if you add on the cost of a tariff, they would lose sales because it would be very difficult for consumers to afford even more.

KAUFFMAN: Krebs says car companies like Nissan and Hyundai face a similar scenario. And she says if prices go up and production slows, it could mean job cuts. That's why Republican Senator Lamar Alexander of Tennessee and Democratic Senator Doug Jones of Alabama filed a bill this week to delay the tariffs. They're among a growing number of politicians worried about an escalating trade war, and that may help explain why the EU managed to negotiate a truce on the tariffs aimed at Europe.

For NPR News, I'm Johnny Kauffman in West Point, Ga. Transcript provided by NPR, Copyright NPR.