Flex-N-Gate CEO: Tariffs give ‘advantage to the home team’

Detroit — Shahid Khan, president and CEO of auto supplier Flex-N-Gate and the NFL’s Jacksonville Jaguars, wants America’s middle class to return.

The Pakistan-born billionaire opened a $160 million, 480,000-square-foot manufacturing plant in Detroit in October 2018. It was the largest investment in Detroit by an auto supplier in more than two decades. Flex-N-Gate makes exterior trim components with injection molding and metal processing, and other products and supplies parts to Ford Motor Co. from the plant.

It now employs more than 600 in Detroit, about half of whom live in the city.

“Last year, we launched our state-of-the-art factory,” Khan said Nov. 19 during a speech at the Masonic Temple in Detroit as part of a Detroit Economic Club luncheon. “[It] absolutely needed state of the art investment and infrastructure, training people who hadn’t worked in a facility and one that would be globally competitive. That was hard. There were more challenges than I ever imagined. But also more satisfying than I ever managed.”

Khan said Ford Chairman Bill Ford Jr. and Detroit Mayor Mike Duggan convinced him that opening in Detroit was critical and he agreed because he felt it important as the “middle class is the heart of the market.”

During the wide-ranging speech and question-and-answer section with Detroit News columnist Daniel Howes, Khan made assertions about the downside of globalization and the benefits of President Donald Trump’s trade policy.

Khan laid praise on Trump’s “America First” policy.

“He’s really hit on the trade aspect,” Khan said. “You can’t have other countries really destroying our infrastructure. That’s what has happened under this model [of globalization]. Any country you go to … they buy the local product first.”

Asked what about the policy he supported, he pointed to tariffs.

“To collect and to give an initial advantage to the home town team,” Khan said. “They capture the value back in Japan, Germany or wherever. [The] tax structure that does that. Outsourcing a lot of stuff hasn’t worked.”

He also gives credit to the Republican-led Tax Cuts and Jobs Act, signed by Trump in 2017, that lowered corporate taxes from a maximum rate of 35 percent to 21 percent as well as broadened expenditure write offs.

“A key driver is the tax policy put into effect a couple of years ago,” Khan said. “That is driving a lot of the investment. I think some of the policies that have been started focus on middle class job creation.”

Khan, however, strongly disagrees with the White House’s immigration stance.

Khan immigrated to the U.S. in 1967 at the age of 16 to study engineering at the University of Illinois. Flex-N-Gate hired Khan to work at the company during his college years. He bought the company in 1980.

“Really disconcerting to me is this national discussion on religion and immigration,” Khan said to applause. “Legal [immigration] and otherwise. That’s what’s driven this country.”

Khan believes investments like Flex-N-Gate’s in Detroit will continue and the manufacturing sector will continue to gain momentum despite a shaky global economy and uncertainty around trade and the White House. And there’s no other industrial policy the U.S. should mimic.

“We’re the innovator. This is the cradle of innovation,” Khan said. “But it isn’t like we’re going to copy and paste. What’s driven this country is immigration, growth. And not much respect for the status quo.”

This post appeared first on Plastics News.