Ford Abandons Mexican Plant, to Return to United States

Jason Schwartz ’17, Staff Writer

On Tuesday morning, Ford Motor Co. discarded plans to build a $1.6 billion small-car factory in Mexico, according to The Wall Street Journal.  What could be the reason?  A tweet written by President-elect Donald Trump very early Tuesday morning in which he denounced its top competitor, General Motors:

“General Motors is sending Mexican made model Chevy Cruze to U.S. car dealers tax-free across the border.  Make in U.S.A. or pay big border tax!”

Ford reacted quickly, taking advantage of Trump’s fiery tweet aimed at its competitor.  On Tuesday evening, Ford proposed to build a $700 million factory in Michigan.  According to POLITICO magazine, Ford CEO Mark Fields said optimistically his investment in the future Michigan plant is a “vote of confidence for President-elect Trump. We see a more positive U.S. manufacturing business environment under President-elect Trump and the pro-growth policies he’s talking about.”  The following morning, on January 4th, Trump thanked Ford for its efforts via Twitter:

“Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow.”

Trump’s praise for Ford’s gesture demonstrates his unshakable promise to benefit the United States economy whatever way possible.  In this case, he wants to rewire our present-day trade policy with Mexico.  He strongly disagrees with NAFTA (North American Free Trade Agreement), which allows producers to import goods from Mexico to the United States with no tariffs.  According to CNN Money, Trump promises to enforce a 35% tariff on products made in Mexico and imported into the United States.  

In Mexico, Ford’s retreat grasped the attention of the Mexican media and economists.  Mexico’s most influential newspapers, including La Jornada, El Universal, and Reforma, have put Ford’s withdrawal on their front page and provided analysis on the matter.  “Trump leaves Mexico without 3,600 jobs,” read the headline on El Universal.  “Ford’s decision is indicative of what awaits the economies of both countries,” La Jornada reported. “For ours a severe decrease in investment from our neighboring country, and for the U.S. a notable increase in their production costs.”  Mexican analyst Alejandro Hope remarked that Trump’s was a “much needed wake-up call.”  He and other economists are worried about the likelihood of other companies ceasing their operations in Mexico and returning to the United States.  “It certainly shows that the idea that the status quo was entrenched was false,” Hope said. “This should put us on notice that when [Trump] says that he wants to renegotiate NAFTA, he means it.”

Alternatively, Ford’s escape from Mexico could be because of their long-term goals and market demand, according to the Chicago Tribune.  In Michigan, Fields plans on building more electric-powered and self-driving vehicles and hiring more skilled-workers, who are easier to find in the United States, to complete the task.  “The era of the electric vehicle is dawning,” Fields told his employees, “and we at Ford plan to be a leader in this exciting future.”  Mark Muro, who studies economic policy at the Brookings Institute, points out the flaws of the prospect of Ford’s Mexican plant: “The Mexico platform is essentially a lower cost, just-good-enough workforce,” Muro said. “It is not a place where there’s a lot of innovation or new product development.”

Nevertheless, President-elect Trump has stuck to his word that he promised during his campaign: to bring back jobs to America.  Even though his inauguration is not for another two weeks, he has already begun to turn the tide, using Twitter as a primary form of communication to put forth his declarations.  For Trump, less than 140 characters has the power to do the job.  It shows “how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently,” Hope said. “They claimed that at the end of the day economic interests would prevail over political messaging. That’s clearly not the case.”

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  • Interesting analysis

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