Before the pistons for General Motors Co V-6 engines, reach the US number one automakers Romulus, Michigan plant, they are seasoned international travelers. Powdered aluminum from Tennessee is sent to Pennsylvania and forged at high temperatures for the pistons. After that they are sent to Canada for shaping and polishing. Post this process they are shipped to Mexico for sub assembly and finally the finished distance are loaded onto trucks bound for Romulus to become a part of a GM V6 engine.
Jim Bovenzi, General Motors executive director of global supply chain mentioned that the parts already have their passports. He also mentioned, “We look at North America as a borderless region. We have parts and components coming back and forth across the border all the time.”
This engine is simply an example of how rivals such as General Motors, Ford motor company and Fiat Chrysler automobiles have been using the NAFTA to reduce cost, boost returns from the region that represents the bulk of their global profits.
Donald Trump, the US President is now seeking to replace NAFTA with the United States Mexico Canada Agreement (USMCA). If NAFTA is pulled out of the United States, automakers would be forced to pay heavy tariffs under the WTO rules. Ford, Fiat Chrysler, Japan’s Toyota motor corporation, Nissan motor corporation have all built up similar international supply chains to support their North American assembly operations.
The democrats who are in favor of more labour and environmental protections are trying to make progress towards passing the USMCA in 2019. In case if the USMCA is not passed in 2019 there is a greater risk of it been postponed to 2020 ahead of the next presidential election. In case the USMCA is postponed till 2020 there is a huge probability of another extended period because of the uncertainty of the bill to pass.