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Stocks down as automakers, Boeing lead China's hit list in trade spat

Shares in U.S. exporters of everything from planes to tractors fell on Wednesday after China retaliated against the Trump administration's tariff plans by proposing duties on key U.S. imports including soybeans, beef and chemicals. U.S. automakers' products are prominent on China's list of tariff targets, yet shares of automakers ended higher on Wednesday as Wall Street stocks changed course in the afternoon when investors' trade fears subsided. Tesla shares closed 7.3 percent higher at $286.94, Ford shares gained 1.6 percent to close at $11.33, and GM shares were up 3 percent at $38.03. Aircraft maker Boeing closed down 1 percent, weighing the most on the Dow Jones Industrial Average as documents from China's Ministry of Commerce and the U.S. manufacturer showed the move would affect some older Boeing narrowbody models. It was not immediately clear how much the tariffs would impact its newer aircraft. Boeing said it was assessing the situation while analysts from JP Morgan said the proposals from China looked to have been calibrated carefully to avoid a major impact on the planemaker. Fellow Dow component 3M lost as much as 2.4 percent. And farming equipment maker Deere lost nearly $10 per share at its lowest. The company urged the two countries to work toward a resolution to "limit uncertainty for farmers and avoid meaningful disruptions to agricultural trade." The speed with which the trade spat between Washington and Beijing is ratcheting up — the Chinese government took less than 11 hours to respond with its own measures — led to a sharp selloff in global stock markets and commodities. China was hitting back against U.S. President Donald Trump's plans to impose tariffs on $50 billion in Chinese goods with similar tariffs on U.S. goods even as Trump said the country is "not in a trade war with China." "Everybody knew they were going to retaliate. The question was how strong of a retaliation. Today's move clearly shows that they mean business," said Adam Sarhan, chief executive of 50 Park Investments in New York. China levied 25 percent additional tariffs on U.S. goods, but unlike Washington's list that covers many obscure industrial items, Beijing's covers 106 key U.S. imports including soybeans, planes, cars, whiskey and chemicals. Trump denied that the tit-for-tat moves amounted to a trade war between the world's two economic superpowers.

Fiat Chrysler may build an AWD Pacifica minivan

Fiat Chrysler is reportedly considering building an all-wheel-drive variant of the Chrysler Pacifica as a salve for the minivan's flagging sales, especially in Canada, where it's built, and where the Dodge Grand Caravan is eating its lunch. Automotive News cites a ranking official with Unifor, Canada's autoworker union, and two anonymous sources familiar with the company's internal machinations. In addition, the outlet cites the CEO of AutoForecast Solutions, a consulting firm, who says his industry data show that FCA will begin production of an AWD Pacifica in the second quarter of 2020 at its plant in Windsor, Ontario. "It's going to help them with their leadership of the product," it quoted CEO Joe McCabe as saying. An FCA spokeswoman told Autoblog the company doesn't comment on speculation about future products. Pacifica sales have held relatively steady in the U.S. Full-year 2018 sales were a respectable 118,322, essentially flat with 2017, compared to 151,927 Grand Caravans, an increase of 21 percent. Sales through February of this year were down by 24 and 27 percent, respectively, but FCA says its share of the overall U.S. minivan market has nevertheless risen to 57.7 percent. But cross the Detroit River into Canada, FCA's second-largest market for minivans, and things don't look as rosy for the company's flagship minivan. There, the Grand Caravan in 2018 outsold the Pacifica by a 5-to-1 ratio, 32,253 to 5,999, which represented respective declines of 31 percent and 3 percent. Things haven't gotten any better in 2019, either, with Pacifica sales falling 55 percent through the first two months to 512 and Grand Caravan sales slipping 20 percent to 4,836. FCA's share of the Canadian minivan market was 59 percent at the end of 2018, the company says. Canada is known as the Great White North, after all, so it makes perfect sense that all-wheel drive is a popular sell there as a way to navigate the long, snowy winters. But there are questions about whether adding a rear driveshaft would affect the Pacifica's Stow 'n Go system, which allows users to fold the third-row seats into the floor to add cargo space. Chrysler in fact offered all-wheel drive versions of its minivans through 2004, when it first introduced the Stow 'n Go, AN reports.

Detroit 3 and UAW set for showdown over tiered wages

This week, thousands of United Auto Workers will converge on Cobo Center in Detroit for the Special Convention on Collective Bargaining, an every-four-year event that lets members tell UAW leaders what the negotiating priorities should be during contract negotiations. This is where a lot of sand and a lot of lines start coming together in preparation for contract negotiations between the UAW and the Detroit 3 automakers, which will happen later this year. Number one on the UAW agenda is the end of the two-tier wage system created in 2007 to help the automakers get through bankruptcy; veteran workers are paid the Tier 1 rate of around $29.00 per hour, new hires are paid the Tier 2 rate of between $15 and $20 and get about half the benefits of Tier 1. Tier 2 hiring has been an undoubted success for the automakers, allowing them to keep factories in the US and hire more workers. By agreement, it is capped at a certain percentage of each automaker's workforce, and while the union's ultimate position is to get rid of the dual-scale system entirely; one leader said Ford could easily afford the $335 million it would take to convert all its workers to Tier 1 out of its $6.9 billion in 2014 North American profit, and General Motors could do the same out of the $5 billion it is handing to investors through the (admittedly forced) share buyback. Other delegates say that at the very least they'd be happy with enforcement of the current caps in the new contract. The automakers, conversely, would welcome expansion of the Tier 2 ranks. Including benefits, import automakers pay workers "in the high $40 range" per hour, according to an analyst, while Ford and GM pay about $59 in wages and benefits per hour. More Tier 2 workers on the rolls would let those two companies get labor cost parity with the competition. Fiat-Chrysler pays wages closer to the imports because of special exceptions in its UAW contract that allow unlimited Tier 2 hiring; those exceptions will end on September 14 and bring FCA into line with the other domestics, unless the new contract maintains them. FCA CEO Sergio Marchionne is opposed to the two-tier system, having called it "almost offensive." One analyst says the UAW might win a sizable pay raise for Tier 2 and a small increase for Tier 1, but the keystone issue will be how the hiring matrix can help the automakers keep overall wages in line with the imports.