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Mercedes US home of Alabama shudders at harsh Trump trade talk

An employee installs parts on the undercarriage of a Mercedes-Benz GLS-Class SUV at the Mercedes-Benz US International factory in Vance, Alabama on June 8, 2017. © AFP / Andrew CABALLERO-REYNOLDS

Tuscaloosa, United States, Jun 14 – President Donald Trump’s harsh criticism of Germany’s trade practices is sowing concerns in rural, Republican Alabama, where Mercedes-Benz has been an economic engine for two decades.

The big German carmaker since 1997 has manufactured cars in Tuscaloosa, a city of 90,000 in western Alabama previously known almost exclusively for being the home of the University of Alabama and its celebrated sports program.

Mercedes now builds the C-class sedan, and its GLE class of sport utility vehicles at the massive plant, which is marked with the company’s trademark three-pronged star on a road dubbed “Mercedes Drive.”

About 7,000 people pass through the plant each day, including 3,600 full-time workers.

Among them is David Harbin, a veteran employee in his 50s who started at the factory in 2002 and counts on the company for health insurance and a $50,000 a year job in logistics.

Threats of a trade war with Germany have been a source of worry.

“I would lose my job,” said Harbin, who has two children. “It would be hard.”

Trump, who used a Mercedes Maybach limousine at his 2005 wedding to Melania Trump in Palm Beach, threatened in January to levy a 35 percent tariff on imported German cars that he blames for large US trade deficit.

– ‘Cataclysmic’ effect –

Those threats are a source of bafflement and worry in Alabama, which Trump carried with 62 percent of the vote in the 2016 election.

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“You are talking about thousands and thousands of people who would lose their jobs overnight without the ability to easily transition to another field,” said Tuscaloosa Mayor Walter Maddox said. “It would be cataclysmic.”

Prior to Mercedes opening its factory, “almost everybody worked at the coal mines,” said Bo Hicks, co-owner of Druid Brewery, which counts on the plant for business.

“Mercedes gave jobs while coal mines continued to shut down.”

The company has a key role in the city, where a large part of the population are evangelical Christians and which continues to feel the legacy of racism and poverty.

To woo the German luxury carmaker, local officials rolled out the red carpet with $253 million in subsidies, tax abatements and job-training incentives, money that they consider well spent.

“Mercedes is the catalyst of the state of Alabama,” said Greg Canfield, the state’s commerce secretary said.

And Jim Page, chief executive of the Chamber of Commerce of West Alabama, said, “Candidly and with all due respect to the president, any rhetoric that undermines or insults our economic allies is inappropriate and is not productive in any shape form of fashion.”

– ‘Made in Alabama’ –

There is no indication thus far that Trump’s attacks have affected the German carmaker’s sales. Mercedes has sold 145,658 cars in the US market so far this year. That is down 0.9 percent, but smaller than the two percent drop in industry-wide sales.

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Jason Hoff, president and CEO of Mercedes-Benz US International, looks at paperwork during an interview with AFP at the Mercedes-Benzfactory in Vance, Alabama on June 8, 2017. © AFP / Andrew CABALLERO-REYNOLDS

In 2016, Tuscaloosa, manufacturing at full capacity, produced more than 300,000 cars and imported 380,000 for sale in the United States.

“We have a fairly close balance actually between what we produce here versus what we actually sell here so we’re not way out of balance,” said Jason Hoff, chief executive Mercedes-Benz US International. “We are committed to the area.”

Mercedes has promised recently to use “Made in Alabama” parts in its cars, and, according to the National Highway Traffic Safety Administration, it sourced 80 percent of the parts for the Mercedes C-class cars in 2017 from the United States or Canada, up from 55 percent in 2016.

The company has nearly completed a $1.3 billion expansion of the plant announced in 2015 to build next-generation SUVs, bringing its total investment in the state to $5.8 billion. The project is expected to add about 300 jobs, even as much of the new work will be performed by robots.

The Mercedes plant also credited with putting Alabama on the map for other manufacturers.

Toyota, Honda, Hyundai-Kia and dozens of automobile suppliers have built plants in the region, accounting for 38,730 jobs in 2016, according to the Economics Development Partnership of Alabama, which said the state ranks fifth in overall automobile production.

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