GOP Presidential candidate Donald Trump said he would tax each Ford vehicle imported from Mexico.
Despite yesterday’s news that Ford has brought production of its biggest pickups back from Mexico to the U.S., GOP candidate Donald Trump is continuing to threaten the Detroit maker over its plans to set up a new assembly plant south of the border.
But his alternative solution could create some serious issues of its own, perhaps breaking the union representing Ford’s American autoworkers and forcing assembly line employees to accept lower wages in order to compete with more poorly paid workers in Mexico.
“We’ve got to keep (factories) here. It’s not that hard to do,” Trump told the Detroit News in a 15-minute interview. By allowing manufacturing jobs to move out of the U.S., “pretty soon all we’re going to have is nursing home jobs,” he added.
The controversy was sparked by news that Ford plans to open a new assembly plant in Mexico. That factory is expected to take over production of the Focus and C-Max models the maker recently said it will move out of a plant in the Detroit suburbs – though it has not confirmed where those two products will go next.
During the news conference announcing his candidacy in June, Trump warned that as president he would call Ford CEO Mark Fields with some “bad news,” advising him that “Every car, every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35 percent tax.”
Experts have questioned how a President Trump would accomplish such an act, especially in light of the North American Free Trade Agreement. They’ve also asked why the billionaire reality TV star has singled out Ford without mentioning the dozens of other makers, from General Motors to Kia to Mercedes-Benz, who are producing cars for the U.S. in Mexico, many of them expanding their operations there substantially.
The interview with the Detroit newspaper adds a new wrinkle – and introduces a variety of problems. Referring to the Ford plant, he said, “We just can’t have that. It just can’t happen, and we have to stop it.” And if low wages are a major factor encouraging the auto industry’s flight to Mexico, maybe manufacturers need to find places in the U.S. where it can pay workers less, he said.
“You can go to different parts of the United States and then ultimately you’d do full-circle — you’ll come back to Michigan because those guys are going to want their jobs back even if it is less,” Trump suggested in his interview. “We can do the rotation in the United States — it doesn’t have to be in Mexico.”
There are a number of issues raised by Trump’s suggestion. For one thing, Ford’s U.S. plants are represented by the United Auto Workers Union and under the current contract it would cover any other plant the maker were to open in the country. Ford is hoping to reduce its costs a bit under the new four-year agreement it expects to hammer out with the UAW by next month’s deadline, but no one expects that would put it in line with Mexican wages.
Indeed, neither are the wages being paid already by non-union “transplant” factories operated by a wide range of foreign-owned manufacturers, most of them in the Southeastern United States. A few of those plants, including the BMW facility in South Carolina, actually have higher labor costs than those operated by Detroit’s Big Three automakers.
(Ford moves truck production from Mexico to Ohio. For more, Click Here.)
Including wages and benefits, assembly line workers in the U.S. make between around $45 to $60 an hour, though so-called Tier II employees of Ford, General Motors and Chrysler actually have some of the lowest wages in the industry, about half that of their veteran counterparts.
Relying on that lower tier helped GM justify moving production of its small Chevrolet Sonic model back from South Korea to the U.S. a couple years ago.
Even those employees would not be cost competitive with Mexican auto workers who are believed to average less than $8 an hour, according to various industry reports. If American plants somehow matched that figure, auto workers who once led the American blue collar middle class would plunge to the level of fast food workers. In fact, they’d earn significantly less than what employees at places like McDonald’s are now taking home as pressure grows across the country to boost the long-stagnant minimum wage.
(Click Here for details about U.S. auto imports running at record levels.)
Ironically, then, this approach could potentially bring back manufacturing jobs, but put factory workers at an earnings level at or below that of the nursing home employees candidate Trump referred to.
Ford CEO Fields has replied to the GOP candidate in a letter that, a company spokesman said, “thanked him for his kind words.” It also noted that the maker has invested $6.2 billion in the U.S. since 2011, and hired nearly 25,000 American employees.
Trump, however, said that did not change his position on the Mexican plant which, he added, “cannot be justified.”
(To see why Tesla rolled out a $500 million stock offering, Click Here.)
The Trump campaign office has so far not returned calls for comment and clarification.
Do you know how you can tell when a politician is lying? Answer: Their lips are moving. LOL
IMO, Trump doesn’t have a snowball’s chance in Hell of being elected president of the U.S. Despite that Obama has proven that the POTUS believes he is above the law and does not need to comply with law. Mr. Obama believes that he can by-pass immigration laws or impose amnesty for illegal aliens whenever he feels like it. So why should Trump not believe that he can tax Ford or any other company?
As far as imports from Mexico or elsewhere are concerned, I am on record as stating that all imported goods should be taxed so that they must sell for similar prices to quality U.S. made goods. At one time the U.S. was the manufacturing capitol of the world. That’s before unscrupulous CEOs decided exporting U.S. jobs could provide them with larger mega-million dollar annual bonuses on top of their mega-million dollar annual base compensation.
These CEOs like Tim Cook from Apple should move to China and Field’s to Mexico city and enjoy all that these countries have to offer, with compensation comparable to the laborers in these countries.
Trump is a shoot from the hip kind of guy. While he occasionally gets something right such as criminals and rapist coming to the U.S. from Mexico, he got it all wrong by claiming McCain was not a war hero. He alienated Hispanics by stating the truth regarding criminals from Mexico and alienated the Vets by being wrong about McCain and the military. Who knows what the guy would do if elected president?
This is a presidential candidate? Oh yea I forgot its always the little guy that takes in the pocket book. Even being all american he still screws over the little guy. Trump cant give a straight answer. And I want to see Trumps birth certicate also.
Can anyone explain why the Donald has such an issue with Ford in particular? Everyone and their brother is building plants in Mexico, yet does he make them part of his target set?
He seems to think that POTUS=CEO. You can’t just snap your fingers and have people do what you want. “Benevolent dictator” is not defined in the Constitution
Jorge, “unscrupulous CEOs decided exporting U.S. jobs could provide them with larger mega-million dollar annual bonuses on top of their mega-million dollar annual base compensation.” are not what has caused a shift in mfg jobs, its the global economy. Sorry but that’s reality. Running a multi-billion dollar mfg company or any company requires smart people. Folks that run Ford and other companies are incredibly smart people. They EARN every cent of what their boards permit them to earn. Anyone that critiques CEO pay is clueless, period. Oh but Matt Damon gets $25M for stupid move when a CEO makes whatever, while competing in a global environment and is literally responsible for thousands of employees. Trumps words are meant to encourage mfgs to stay here vs moving there. There are ways such as reducing TAXES and encouraging mfg and investment here. Our Business taxes are the highest in the world, where is the incentive to stay, there isnt any. However labor is the single biggest cost and now with BarrySoetoroCare, it costs even more to higher people. COSTS in a global environment cut your competitiveness and if you lose there, there will be “no” jobs… China owns Volvo and its a good thing they’re going to build a plant in SC. In China the tariff is so high for imported cars, they will not be competitive. But to build there you must align with a Chinese company in a JV. So, my comment is any car exported FROM China to the US faces the exact same tariff OR you build a plant here to employ American. Seems they got that msg already… Allan Mulally was the CEO of the Decade and he deserved every nickel he earned. He literally saved Ford and every Ford job, every single one. I’m sure those employees were glad he was there vs someone else. He was perhaps the Michael Jordan of Car CEO’s at the right time and place. That’s worth any price…. if the employees think they’re getting stiffed, they should get a degree and go become a CEO in their own right. Better yourself and worry about yourself. Children complain about “fairness” and what others get.. her pie is bigger than my pie… clueless…
Sorry that you believe the foolishness perpetuated but the CEOs I speak of at the car companies and elsewhere are good at exploiting labor and exporting jobs because they have no moral values yet they desire to enjoy all the high comfort living and working benefits that the U.S. has to offer while exporting U.S. jobs. If you compare U.S. CEO compensation to equal position CEOs in other countries those in the U.S. typically receive 5-20 times what CEOs in other countries running similar businesses receive. That is a fact you can easily confirm.
Educated people know this and even investors are starting to question the outlandish compensation packages U.S. CEOs receive. How can anyone justify Tim Cook of Apple receiving $800 million in annual compensation while using Chinese slaves to produce Apple products sold in the U.S., UK and elsewhere? They Can’t! It’s complete unscrupulous.
Taxes in the U.S. are NOT the highest in the world as German nationals and others can substantiate. The U.S. CEOs enjoy some of the finest living on the planet and most use all of the tax exemptions they can to eliminate corporate and personal taxes. Do you know that General Electric paid NO U.S. income taxes last year despite making billions in profits in the U.S.?
When you start with the foolishness about U.S. workers being over-paid it shows you have no clue. Virtually every study ever conducted shows that U.S. workers are some of the highest producers of any workers around the globe. In fact recent surveys show that with the U.S. economy increasing workers are being forced to produce more without additional compensation because employers are understaffing as no one is convinced the recession is over. Using slave labor in China is cheap but their are other costs associated with this including transportation costs which have skyrocket in recent years. That is why some jobs are coming back to the U.S.
The ONLY reason a company exports jobs if for perceived increased profit. Using third world countries to by-pass human rights and decent working conditions and worker compensation is disgraceful and illustrates the lack of ethics by many CEOs. It’s always about the money that causes unscrupulous people to do what they do. If the U.S. were to tax Chinese imports as China taxes U.S. imports, then the jobs would come back to the U.S. where they originated.
Again you are misled. Mulally was certainly responsible for some of Ford’s success but the company had already changed course before the great recession and their new product in the pipeline is what saved Ford. The fact that they used Aston Martin’s body styling to do it is of interest but none the less, Mulally did NOT save the company but instead got the new product out the door and consolidated some of the operations for better efficiency.
No a CEO is not worth “any price”. That is delusional thinking as there are many CEOs that could properly run any company in the world and maintain profitability if the Biz model is sound.
Your insulting comment that laborers “should go get a degree and become CEOs” is outrageous offensive. You might be surprised to learn that there are many degreed laborers working for automakers as well as multi-billionaires that dropped out of college to form a company as Bill Gates did. You have a LOT to learn about life, economics, politics and financial greed. Your beliefs are simply not supported by reality.
Yes some folks who expect a free lunch complain all the time and when they make enough noise the unscrupulous in D.C. declare that 5 million illegals can stay in the U.S. illegally, take U.S. jobs, receive S.S., lower the U.S. standard of living and free load off tax payers in complete violation of law. The rest of us go to work everyday and pay for this crime committed by the POTUS and the other criminals on Capitol Hill.
Banana needs to do a bit more research. Last your more than 20 of the very largest US companies paid LESS THAN $0 in taxes.
http://www.forbes.com/sites/robertwood/2014/08/15/forget-inversions-these-20-huge-profitable-companies-already-pay-zero-tax/
And tax incentives, meant to help businesses expand overseas in the 1950’s when we were “the last man standing” after WWII, now serve to PROMOTE moving jobs overseas. He would be interested to learn that none of the top US multinationals have done any NET hiring in the USA since 1989! So its only the small and medium cap companies which pay our outrageous tax rates – they don’t have congress in their pockets, you see.
Banana do you recall who drove GM, Chrysler and Ford into bankruptcy? Yes Ford was able to avert it but just barely. The people who ran the Big Three into bankruptcy were the executive management not the workers. Who ended up making concessions, losing jobs, losing pensions, etc. due to the mismanagement at GM, Chrysler and Ford? Correct it was management who caused the businesses to fail and the workers are the ones who were punished and who made sacrifices to save the company. GM and Chrysler didn’t even fully repay their loans. Exporting jobs is just a means to get a bigger bonus for many CEOs.