Auto industry speed bump is bad news for heartland — and Trump

Ever since Donald Trump won the presidential election — having promised to revitalize the manufacturing sector — he has frequently reiterated that promise and touted every possible sign of progress in speeches and tweets. 

Just Sunday, in fact, he tweeted that “…our base has never been stronger!” a boast he reiterated in a second Monday post. 

Yet, for all the cheerleading and claims of early victories, the real news is that Trump — and scores of heartland manufacturing communities — are suddenly facing a surprisingly lackluster outlook in the critical auto industry, the anchor of the all-important manufacturing sector. 

{mosads}News Monday that auto sales fell a full 3 percent last month highlighted the disconnect. After eight years of strong growth following the 2008 economic crisis and federal bailouts of both General Motors (GM) and Chrysler, auto sector employment growth has slowed markedly. Years of catch-up purchases by car buyers have plateaued. Meanwhile, cheap gasoline has depressed sedan sales. 

Thus, a full-on slump has enveloped the sector. Six-straight monthly sales declines have now depressed car and truck purchases ensuring that overall sales are down 2.1 percent for the first half of 2017. Meanwhile, layoffs have begun, starting with announcements from Ford and continuing with reductions at GM and Fiat Chrysler. 

Gone for now is the steady hiring that last year brought in a post-crisis peak of about a million workers to the three main automaking companies, a 41-percent increase since the depths of the recession in 2009.

All of which is an issue — not just for hard-bitten manufacturing communities, but also for President Trump and his fellow Republicans.

To be sure, the new job cuts mostly reflect the cyclical nature of a huge domestic industry and are not cause for alarm regarding the health of the auto sector. However, the current slowdown casts a lengthy shadow because auto industries anchor the broader manufacturing sector, which in turn looms large in national narratives about whether or not the country is “moving in the right direction.”

Auto-related industries, in this regard, matter intensely because they have come to pull more weight than usual in recent years as non-automotive manufacturing industries have lost momentum. 

To be specific, auto industries contributed no less than 80 percent of the nation’s manufacturing-sector employment growth in the 15 months ending with April.  That means that with auto employment growth slumping (and potentially going negative), it is becoming far less clear where even middling manufacturing-sector growth will come from, let alone the “millions” of factory jobs Trump has promised to “bring back” as part of his “Make America Great Again” campaign. 

Therein lies the genuine political and economic problem Trump and his allies face as they begin to worry about next year’s midterm elections. 

Already, manufacturing growth has turned negative in scores of Midwestern communities that voted narrowly for Trump, whether in Wisconsin, Michigan, Ohio or Pennsylvania. Looking forward to 2018, it is very hard to imagine where substantial manufacturing job growth will come from in those states with the auto sector forecasted to remain flat-to-negative in the coming year. 

By contrast, it is quite easy to imagine a tepid year or 18 months of shift reductions and layoffs in congressional districts that have been rattled by recent economic history and that have toggled from party to party in their recent voting behavior. 

Of course, maybe other segments of the nation’s modestly growing manufacturing sector will pick up the slack. The economics columnist Justin Fox, for example, has suggested that a number of new petrochemical plant investments along the Gulf Coast, made possible by the current glut of cheap natural gas in the U.S., promise hiring at some point. For that matter, so does Samsung’s recent announcement of a $300 million home appliance factory in South Carolina.

Still, the fact remains that the current loss of auto hiring as a linchpin of manufacturing-sector growth cannot be welcome. Given that, President Trump and his GOP colleagues in Congress had better hope the warning lights flashing in the auto sector don’t spread.

Mark Muro is a senior fellow and the director of policy at the Metropolitan Policy Program at the Brookings Institution.

The views expressed by contributors are their own and not the views of The Hill.