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Ross said to have reservations about free trade
<p><strong>Ross said to have reservations about free trade.</strong></p>

Ross Auto Industry’s Remaining Channel to Trump

As negotiations aimed at revising NAFTA get under way, Commerce Secretary Wilbur Ross, 79, occupies a pivotal role between the administration&rsquo;s trade hawks and key constituencies such as the auto industry.

With the sudden demise of the Trump Admin.’s Manufacturing Council, which early on included both General Motors CEO Mary Barra and former Ford CEO Mark Fields, the nation’s auto industry is left without a clear, direct channel to the Oval Office except for one person: U.S. Secretary of Commerce Wilbur Ross.

As negotiations aimed at revising NAFTA get under way, Ross, 79, occupies a pivotal role between the administration’s trade hawks and key constituencies such as the auto industry.

Automakers fear the negotiations with Mexico and Canada could lead to an entirely new set of rules, Boston Consulting Group’s Xavier Mosquet says.

Barra had said she hoped the manufacturing council could allow GM and the auto industry generally to offer its views to the president. Ross, however, is himself something of an industry insider, having reorganized what is now a major automotive supplier, International Automotive Components, in 2006 on the eve of the financial crisis and Great Recession.

His active role with IAC ended in 2014 when he stepped aside to pursue other interests, according to IAC spokesman David Ladd. He also served for a time as a director of a local bank in suburban Detroit, the Talmer Bank.

Ross also has ties to key auto-industry figures such as Robert “Steve” Miller, a specialist in turning around distressed automotive businesses who now serves as IAC’s president and chief executive officer, and Ron Bloom, vice chairman of Brookfield Asset Management, who once directed President Barack Obama’s automotive task force.

IAC, the automotive supplier Ross created in 2006 out of the remains of Collins & Aikman, which had collapsed under the management of former Republican congressman and policymaker David Stockman, has continued to grow through the years with a series of acquisitions. It now has plants throughout North America and key engineering and technical offices near Detroit.

Since IAC is privately held, it discloses limited financial information. But it has operations in 20 countries in North America, Europe and East Asia. Miller has said one of his goals at IAC is to diversify by expanding its operations in other parts of the globe.

According to information gleaned from IAC’s website, North America accounts for the biggest share of the company’s revenue and the North American business depends heavily on its Mexican operations, which has been an important element of IAC’s post-reorganization success.

Ross noted in a 2007 press release issued after IAC had bought out Collins & Aikman’s plant in Hermosillo, Mexico, where Ford has a big assembly plant, “Hermosillo is a major addition to our Mexican manufacturing footprint and demonstrates our commitment to expansion in low-cost countries.”

Miller took over IAC at Ross’s request in 2015, a year after Ross had stepped down as board chairman. IAC again expanded its Mexican footprint in 2015, following other automakers and suppliers into the country’s rapidly expanding automotive-components base.

“The new IAC Arteaga (Mexico) plant, which currently employs approximately 320 people, will serve as a dedicated center of expertise for…highly crafted automotive interior components, including instrument panels, door panels, floor consoles, armrests and bolsters,” a company news release said.

“Including the new Arteaga plant and three other recent company plant expansions in Mexico, IAC is in position to support the automotive industry’s continued growth in the country.”

Trump’s election, though, appears to have slowed automotive investment in Mexico. Earlier this month, Toyota and Mazda announced plans for a new joint assembly plant somewhere in the U.S. rather than in Mexico.

IAC broke ground in June for a new plant that will supply components on a just-in-time basis to General Motors’ assembly complex in Arlington, TX.

Miller has known Ross since early in the previous decade during his tenure at another distressed company, Bethlehem Steel. Both Miller and Ross were looking at restructuring the steel industry through a mega-merger of Bethlehem and other companies. The key was an agreement with the United Steelworkers of America, which was struggling to protect union jobs.

Miller recounted that in 2002 Ross persuaded the USW and its investment advisor, Bloom, a former investment banker recruited by the union to help negotiate an agreement, to accept his offer. Ross then organized a new enterprise called International Steel Group comprising the former Bethlehem Steel, LTV and other steel companies. ISG was acquired by Mittal Steel for $2.2 billion in 2005.

But in his years as an international investor in distressed companies in steel, auto and textiles, Ross is described in various profiles as having developed reservations about free trade. Moreover, he has profited from the tariffs imposed on imported steel more than a decade ago to slow the import of cheap steel from the Ukraine and Central Asia.

Through Bloom, who later served as an advisor to the UAW and the National Letter Carriers Union and was a key Obama appointee to the task force that arranged for the 2009 bailout of Chrysler and GM, Ross has developed a working relationship with various unions having a keen interest in the NAFTA negotiations.

“Supporters of the status quo try to explain away the simple fact that NAFTA has failed workers in all three countries. While overall trade volumes and corporate profits are up, wages in all three countries have remained largely stagnant," the UAW notes in a recent issue of its Solidarity magazine.

“Too often workers are not compensated fairly for their work. The fundamental right to collectively bargain is under regular attack in the U.S., threatened in Canada and essentially nonexistent in Mexico, resulting in falling union density and rising economic inequality across North America,” the Solidarity article says.

The NAFTA talks also are fraught with side issues such as imports of Canadian lumber into the U.S. and cross-border trucking between the U.S. and Canada, which the Teamsters Union adamantly opposes.

Ross has acknowledged there are substantial political obstacles facing NAFTA negotiators, noting one of the challenges will be to complete some kind of agreement before the campaign for the presidency of Mexico gets under way early in 2018. Negotiators met for the first time Aug. 20 and plan to meet every three weeks through the end of the year.

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