NOVI, Mich.—Projecting the future is never easy. And with uncertainty on a number of fronts, it's anyone's guess what lies ahead for the automotive industry.
Trade volatility between the U.S. and China, a new North American trade pact (pending approval) and new tariffs all bring a higher than usual level of uncertainty to the global landscape. And even though 2018 saw U.S. light vehicle sales rally for the fourth-biggest year on record, most are forecasting a dip for 2019.
Add it all up, like the experts at the Plastics & Rubber in Automotive conference did, and the result is clear: It's hard to tell exactly what 2019 has in store.
Chris Kuehl, managing director, Armada Corporate Intelligence, has a more optimistic outlook, largely driven by the fact that the U.S. economy is the largest in the world by far, making it the envy of international companies.
"We are a consumer-driven economy and we always have been," Kuehl said in his Jan. 15 presentation at the event in Novi. "It's one of the things that really colors what we do globally, and it's one of the reasons we have trade deficits. We like to buy things and we're very, very interested in buying things cheap and readily. It's one of the reasons countries like China and everybody else want to be in our market, it gives us a certain leverage."
How much leverage? Kuehl said that each state of the U.S. corresponds to another country. California has the same GDP as France. Canada's GDP fits into Texas, Kansas matches with the Czech Republic, Michigan was paired with Poland and Minnesota with Norway, to name a few.
"We have nearly a $20 trillion GDP," he said. "There is no country in the world that comes anywhere near us. China is about half of our size. If you took the other four of the top five economies, they all fit in the U.S. When you talk about unemployment rate or the growth rate or inflation, you almost have to break it down very quickly into every part of the country. Every state in the union corresponds to a country when it comes to GDP."
Perc Pineda, chief economist for the Plastics Industry Association, said he doesn't believe that tariffs are "right out" influencing the economy. Rather, it would depend on what kind of business model is being deployed by individual companies.
For instance, a turnaround retailer who is a strict importer from China would probably just tack on the 25 percent increase in duties. But an importer of materials and components to the manufacturing sector would be pricing itself out of the market if it tried the same tactic.