Santa Barbara is fortunate to have a local venue like the Channel City Club to hear from leading experts on state, national and international topics.
This nonprofit organization attracts distinguished professionals from a wide range of fields and draws thought leaders from our community. There were even several UC Santa Barbara students in attendance at a recent meeting.
The club has featured wide-ranging presentations, including “Weaponizing Space,” “Changing Trends in Middle East Politics” and “China Perspectives,” with events held at the University Club of Santa Barbara.
The June 4 briefing — by Tim Ingle, a top executive of Toyota Motor North America, on “North America’s Future in Trade and Investment” — is another notable example.
In his introduction, club president Dan Crocker talked about his longtime friendship with our speaker, dating back to their days as MIT graduate fellows.
He noted that Ingle’s early career involved working for the Energy Department to track down nuclear weapons left when the Soviet Union collapsed — important work for international safety.
To tee up Ingle’s remarks, Crocker talked about the impact of Chinese control over rare earth minerals that are such a critical part of the global supply chain and international trade deals, including the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA).
Ingle serves as chief financial officer and group vice president of enterprise strategy for Toyota’s huge North American operations.
He shared some company history, noting that Toyota originally grew from the electrification of looms. Ironically, electrification of cars is now the big issue.
Ingle noted that Toyota has 14 manufacturing plants in North America, employs 60,000 workers (plus 130,000 employees at dealerships), and has built more than 80 million cars here.
The company is committed to the North American market, having invested more than $60 billion over the years.
Much of the conversation focused on the need to create a framework for open trade, particularly in North America between the United States, Canada and Mexico.
NAFTA was signed into law in 1994 to encourage trade between the three countries. The USMCA, enacted in 2020 to create a more balanced trade deal, is scheduled for a mandatory joint review on July 1.
The question for business, including Toyota, is what is next?
Which gets us to the issue of tariffs.
U.S. auto manufacturers have a 25% duty on imported vehicles and auto parts, including steel and aluminum along with tooling.
While intended to protect “domestic” manufacturers, the fact is that these tariffs hit the Detroit Three (Ford, General Motors and Stellantis) nearly as much as “foreign” manufacturers like Toyota, because all car companies import parts used to build their products.
Ingle noted that U.S. companies simply cannot produce some of the parts — especially tooling — needed by automakers.
And while the U.S. Supreme Court ruled against International Emergency Economic Powers Act tariffs, many others remain legal.
Ingle added that his company’s annual tariff costs have risen from about $600 million to more than $9.5 billion.
It is estimated that tariffs have increased new car prices by an average of 10%-15%, adding between $2,000 to $4,000 to the cost of a typical vehicle, which now averages $50,000.
Today, the idea of a car “Made in America” is more complex than ever. No vehicle sold in the United States is built entirely from U.S.-made parts. American-made Toyotas contain about the same U.S. content as both Ford and GM.
In trying to balance open trade with costs consumers will pay, Ingle stressed the need for a rule-based framework for all auto manufacturers, which is especially important as global electrification is clearly ahead if not already here to stay.
Attendees asked great questions. A question about electric vehicles resulted in information about IONNA, a cooperative effort by eight leading automakers to build out a nationwide EV-sharing network.
Ingle responded to another question about artificial intelligence and autonomous vehicles, noting Toyota’s view about the importance of human interaction with technology.
He observed that human beings are far better than machines at spotting quality problems in the manufacturing process.
Ingle spoke about Japan’s human-centered approach to life and business, taking into account the importance of all stakeholders — workers, customers, suppliers and shareholders — and a commitment to excellence.
I found this philosophy refreshing and consistent with how I ran my business over the years.
After the presentation, members gathered for wine, appetizers, and friendly and thoughtful conversations.
I had nice follow-up conversations with our presenters, and with Jeff Giordano, co-founder of Spotlight Santa Barbara, another great local source of conversation.
Here’s hoping you will join these important conversations. Click here for more information about the Channel City Club.
