Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

Detroit automakers are facing technological disruption, whipsawing government policies and economic uncertainty.

Driving the news: Just-completed labor contracts between Detroit automakers and the United Auto Workers union yielded $22.7 billion in planned investment in U.S. factories over the next four years, adding or securing 25,400 jobs.

  • Instead of pulling on the reins, they are pouring money into their American manufacturing operations.

Why it matters: The spending commitments provide a measure of stability for American auto workers in a rapidly transforming industry, while also giving President Trump something to boast about in industrial swing states.

  • "Every time a car plant opens in Michigan, think of Trump!" the president told supporters at a rally in Grand Rapids on Wednesday.

There's only one new car plant going up in Michigan, but the state and its workers are undoubtedly the big winners from the latest round of labor bargaining.

  • About $15 billion, or two-thirds of the overall commitment from GM, Ford and FCA, is earmarked for Michigan, says the Center for Automotive Research.
  • The rest is sprinkled across the Midwest to revamp factories in Illinois, Indiana, Kentucky, Missouri and Ohio.

Two big factors — technology and trade — are driving the increased investments.

  • Electric vehicles require new equipment and processes, which means some plants must be gutted.
  • Carmakers also need to bolster their U.S. manufacturing footprint to ensure compliance with the new U.S.-Mexico-Canada trade agreement, passed by the House on Thursday and likely to be taken up by the Senate in January.
"You've got to put a lot of money on the table right now."
— Kristin Dziczek, CAR's vice president of research

Between the lines: The USMCA, which replaces the 25-year-old North American Free Trade Agreement, allows current trade flow to continue but sets stricter rules — and in turn higher costs — for parts and labor rates. For automakers to avoid tariffs:

  • 75% of light vehicles and core components like engines and transmissions must be sourced in North America, up from 62.5% under NAFTA.
  • 40% of passenger vehicle components (and 45% of pickup trucks) must be made by workers earning at least $16 per hour — almost four times what the typical Mexican autoworker earns.

How it's playing out: With ratification complete, companies are beginning to disclose details about where the money's going.

  • Ford will invest more than $1.45 billion in two Michigan plants and add 3,000 new jobs.
  • GM will spend $3 billion and create 2,225 new jobs to produce electric pickups and vans at a plant in Detroit.
  • Fiat Chrysler Automobiles will spend $4.5 billion, on top of $4.5 billion previously announced, to expand factories, adding up to 6,750 new jobs.

The bottom line: In an unsettled environment, the business risks are high, but automakers have no choice but to keep investing if they want to stay in the game.

Go deeper:

Go deeper

Dan Primack, author of Pro Rata
1 hour ago - Economy & Business

The unicorn stampede is coming

Illustration: Annelise Capossela/Axios

Airbnb and DoorDash plan to go public in the next few weeks, capping off a very busy year for IPOs.

What's next: You ain't seen nothing yet.

15 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

Scoop: Biden weighs retired General Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star General Lloyd Austin as his nominee for defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.