Ford, Honda, Toyota make case for lower tax rates, more consistent regulations

Officials with Ford, Honda and Toyota, as well as with some key suppliers, told an American  congressional subcommittee that lower tax rates, more consistent regulations and a better-trained workforce would help ensure a strong auto manufacturing sector into the future.

The hearing, convened by the American House Subcommittee on Commerce, Manufacturing and Trade, saw the three competitors largely in agreement in terms of the need for government not to pass along burdensome regulations and to set tax rates and incentives in a consistent manner.

Joseph Hinrichs, Ford’s president of the Americas, testified that lowering the corporate tax rate – which, with a top rate of 35%, is highest among industrialized countries – is key to improving the automaker’s competitive edge worldwide. A lower rate, he said, “frees up capital that can be reinvested in new products, technologies and manufacturing innovation.”

Hinrichs also talked about regulations in the U.S. and trade deals across the globe, saying any agreement that could set common standards for cars and trucks – inside the country or across borders – would help its bottom line. The other automakers largely agreed.

While Hinrichs said a proposed free-trade agreement with the European Union could lead to such standards, he raised – through questioning by U.S. Rep. John Dingell, D-Dearborn – concerns that letting Japan into a proposed Trans-Pacific Partnership agreement could allow that country to continue nontariff trade barriers already in place.

Dingell and others have argued that Japan should be forced to make significant strides in lowering trade barriers before being allowed to join the TPP. In his comments, Dingell said foreign automakers control no more than 5% of the market share in Japan, a country whose auto market, he added, has been “closed tighter than a drum since World War II.”

To a great extent, the hearing was a celebratory one, with members noting the job gains made by the auto industry in the U.S. in recent years. Taking part in a second panel after Hinrich’s testimony were James Wehrman, senior vice president of Honda of America, and Chris Nielsen, president of Toyota Motor Manufacturing’s Texas subsidiary.

In his testimony, Wehrman said Honda expects to increase its exports of autos and parts from the U.S. to other countries, and that free trade agreements are a key part of that. But he – like Nielsen – said workforce training is key, with companies having a hard time attracting skilled workers.

Also testifying was William Smith, government affairs and community relations director for supplier American Axle & Manufacturing. He, as well as others, said that a steady supply of cheap energy is needed for the companies to retain a competitive edge. Smith also noted that construction of the Keystone XL pipeline from Canada could help with that.