The news follows an earlier announcement yesterday that Toyota and Mazda will be investing $1.6 billion to begin a joint venture in constructing an auto assembly plant in Alabama, but have not related their decision to the tax cut. Plans were announced after the election but before any talks of a tax cut.
The move will be accompanied by a $1.4 billion investment and 2500 extra jobs in Detroit. The Warren Assembly Plant will begin production of heavy-duty trucks from 2020. The Mexican plant will be 'repurposed', although it is unknown for what future commercial production. Staff have been notified of job losses in Mexico, but it is understood that there will likely be a new light duty truck production for a new model, yet unnamed and unseen.
FCA said it also would make a special bonus payment of $2,000 to about 60,000 FCA hourly and salaried employees in the United States totaling about $120 million. The CEO said this is because "the new [tax cut] bill allows us to share our savings with you [employees]"
Fiat Chrysler Chief Executive Sergio Marchionne a year ago raised the possibility that the automaker would move production of its heavy-duty pickups to the United States, saying U.S. tax and trade policy would influence the decision. If the United States exits NAFTA, it could mean that automakers would pay a 25 percent duty on pickup trucks assembled in Mexico and shipped to the United States. About 90 percent of the Ram heavy-duty pickups made at Fiat Chrysler’s Saltillo plant in Mexico are sold in the United States or Canada, company officials said.
Vice President Mike Pence praised Fiat Chrysler’s announcement. ”Manufacturing is back. Great announcement. Proof that this admin’s AMERICA FIRST policies are WORKING!” Pence said in a Twitter posting.
The Italian-American manufacturer is basking in high share gains as it finishes the second week of 2018 with a 21% growth.
Other companies directly citing the new tax cut bill in bonuses:
Bank of America will give 145 000 non-senior level employees in the US a $1000 bonus
Wells Fargo and Bancorp will be introducing a $15-an-hour minimum wage and Wells Fargo will be donating $400 million to various charities in 2018 to "share wealth". Both banks will be giving all employees a $1000 bonus
Comcast will be giving all of its 100 000 frontline staff a $1000 bonus and announced a $50 billion investment plan over the next 5 years
AT&T has committed a $1 billion charitable giving plan for 2018 and will issue all 200 000 employees a $1000 bonus
Walmart, the largest employer in the world with 2.3 million employees, has announced they will be raising maternity leave to 10 weeks at 100% of pay, and will be giving all of their US-based employees a tiered bonus up to $1000 based on length of service, along with a pension contribution boost. They have also raised minimum wages to $11 an hour, and committed to ensuring no American Walmart employee claims income-based welfare by 2020.
Boeing's websites cites the new law as the reason for their planned $300 million charitable giving in 2018. " Chairman, President and Chief Executive Officer Dennis Muilenburg praised the tax bill passed by Congress and about to be signed into law as a critical driver of business, economic growth and innovation for the United States and for Boeing.
"On behalf of all of our stakeholders, we applaud and thank Congress and the administration for their leadership in seizing this opportunity to unleash economic energy in the United States," said Muilenburg. "It's the single-most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country.""
With the slew of companies announcing several positive changes to their governance, employee compensation/standards or community relations, it seems like the usual fears by anti-business Democrats that companies will take all the tax savings for themselves and pay them out in dividends have been utterly unfounded. Not a single company has yet announced a dividend boost, but more than $100 billion has been announced in investments.
It seems that the tax cut will, at current rate of news items, emit its intended purpose of enabling growth of the economy and passing down savings from corporate treasuries to employees and communities.
Are you now more or less positive about the US economy in the coming years? How do you think this will impact inequality, if at all? Most importantly, do you attribute this as a win for the Trump administration?
