Ford's Joe Hinrichs said the automaker is aligning its production so it can maximize profits on every vehicle.
At the height of presidential election drama, Ford Motor Co. may have given one of the leading contenders a new soapbox to stand on as it confirmed plans to build a $1.6 billion plant in Mexico.
The Dearborn, Michigan-based automaker expects to begin construction on the new plant this summer with production starting in 2018. The site will produce small cars for the automaker and will create 2,800 new jobs by 2020.
“We’re improving the profitability of our small cars,” Ford President of the Americas Joe Hinrichs told the Detroit News. It has been widely reported that the maker expects to build its Ford Focus and C-Max models in the country.
The move, which isn’t necessarily a surprise, is part of the automaker’s shuffling of product to regions where it can be profitable. The company’s highly profitable line-up of trucks and sport-utility vehicles are made largely in the U.S. However, the UAW expressed its dismay with the move.
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“Today’s announcement that Ford is investing in Mexico is a disappointment and very troubling,” UAW President Dennis Williams said in a statement. “For every investment in Mexico it means jobs that could have and should have been available right here in the USA.
GOP Presidential candidate Donald Trump said he would tax each Ford vehicle imported from Mexico.
“This is another example of what’s wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States. Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.”
The backlash from the union is expected, but it is presidential hopeful Donald Trump who has singled out Ford for producing vehicles in Mexico. Last month, he said he would apply a 35% tariff on every vehicle Ford produces in Mexico and imports into the U.S. Trump has yet to offer public comment on the plans.
Trump has pointedly remarked on Ford’s presence in the country while seemingly ignoring General Motors and Fiat Chrysler who also have operations there. Additionally, he also incorrectly claimed last year that his threat to impose tariffs on Ford vehicles caused the automaker to shift production of medium duty trucks from Mexico to a plant just outside Cleveland, Ohio: a move that had been announced more than a year prior to Trump’s effort to take credit for it last fall.
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“The facts bear out that our investment in the U.S. continues to be substantial,” Hinrichs said to The News. “The investments in Mexico are not having an offsetting effect in the U.S.; we’re not losing any jobs at Michigan Assembly Plant or southeast Michigan.”
Ford has been investing in Mexico, announcing last fall it planned to invest $2.5 billion for two new engine and transmission plants and an expansion of a diesel engine line that will create about 3,800 jobs.
All of the bluster aside, Ford is just one of several makers who have been moving operations to Mexico to take advantage of favorable economic variables in the country. GM and FCA already have multiple plants there and several European and Asian companies are building facilities there as well.
GM is investing $5 billion in Mexico over the next several years. Mercedes-Benz and Nissan-Renault are teaming up to build a variety of products in the country at its COMPAS facility, including possibly a midsize truck as well as variants of small luxury vehicles for the German maker and Nissan’s Infiniti brand. By 2020, COMPAS expects 230,000 vehicles annually will be manufactured at the $1 billion plant, and it could potentially be expanded. In addition, Audi, Honda and Hyundai all have plans to build plants in Mexico.
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Not only are its wages significantly lower than in the U.S., but Mexico has negotiated more free trade deals than any other country but Israel. That makes it easy and cheaper to ship cars built there to markets around the world.