National Post (National Edition)
Ford cancels Mexico plant in win for Trump
FORD CANCELS PLAN FOR MEXICO PLANT AS TRUMP RATTLES U.S. AUTOMAKERS
Ford Motor Corp. cancelled plans for a $1.6-billion plant in Mexico on Tuesday, dealing a major victory to U.S. president-elect Donald Trump, who vowed on the campaign trail to bring jobs back to the U.S.
The decision came just hours after Trump targeted rival General Motors on Twitter, accusing that company of selling Mexicanbuilt vehicles in the U.S., and threatening it with tariffs.
While GM fought back against Trump’s accusations, the public pressure on Ford appears to have paid off, as the company announced it would invest $700-million in its Flat Rock Assembly Plant in Michigan instead.
Trump’s aggressive tactics and his vow to renegotiate NAFTA have sparked questions about how the Canadian auto industry will fare under his presidency.
Repercussions from the election of Donald Trump were felt across the U.S. auto industry on Tuesday as Ford
Motor Corp. cancelled a planned US$1.6-billion plant in Mexico and the president-elect launched a social media salvo against General Motors.
Ford’s decision to scrap its project in San Luis Potosi, Mexico, and use some of that money to invest $700 million and create 700 jobs in its Flat Rock Assembly Plant in Michigan marked a significant political win for Trump.
The president-elect had campaigned on bringing manufacturing jobs back to the U.S. and publicly criticized the automaker’s plans in Mexico, threatening to introduce hefty tariffs if Ford pushed ahead.
Despite the open pressure from the administration, Ford’s chief executive Mark Fields pointed to the need to “fully utilize capacity at existing facilities” amid declining sales of small and medium sized cars to explain his company’s about face, according to Reuters. The announcement was met with cheers from unionized workers gathered at the Flat Rock factory.
Earlier in the day, Trump had directed his ire at General Motors in a tweet, assailing the company for “sending Mexican made model of Chevy Cruze to U.S. car dealerstax free across border” and called on it to “Make in U.S.A. or pay big border tax!”
General Motors hit back at Trump, saying in a statement that it manufactures the Chevrolet Cruze sedan in Lordstown, Ohio. “All Chevrolet Cruze sedans sold in the U.S. are built in GM’s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.,” GM said.
While Trump’s rhetoric has largely been focused on Mexico, the mounting pressure on car makers, along with Trump’s vow to dismantle the North American Free Trade Agreement, has raised concerns about potential repercussions for Canada’s automotive industry.
Tony Faria, co-director of the University of Windsor’s Office of Automotive and Vehicle Research, said Ford’s flip-flop was certainly a reaction to Trump’s bullying and the company being tired of being “battered” for their decision to build another plant in Mexico.
Still, Faria doesn’t believe that Trump’s lashing out at the auto industry will push Ford to pull back on its operations in Canada, even despite the president elect’s America-first agenda.
“We’re in the same boat as the U.S.,” he said. We have potentially been losing investment that we might have gotten to places like Mexico…. There is no reason for Trump to take out or go after Canada the way he did after Mexico.”
Jerry Dias, president of Unifor, which represents more than 20,000 autoworkers, also doesn’t see Canada in Trump’s or Ford’s crosshairs.
“If you’re talking about creating real jobs, there are a lot of places to look instead of picking on Canada,” he said. I believe Canada will be on the bottom of the totem pole when it comes to bringing (jobs) back in house,” he said.
The intertwined nature of the Canadian and U.S. auto industry and the collective agreements signed with the big three automakers have locked in investments, making it difficult to make similar plant cancellations north of the border, said Dias.
Matthew Stover, senior auto analyst with Susquehanna International Group also says the fight is with Mexico, and its attractiveness for automakers, not Canada, even despite the rhetoric.
“I don’t think Ford is going to make any changes in Canada,” he said. “They’ve got a pretty stable facility there that makes a pretty profitable product that is appropriate for the Canadian market.”
Linda Hasenfratz, the chief executive of Linamar Corp., one of Canada’s biggest auto suppliers, has said the dismantling or renegotiation of NAFTA could cost the auto industry “billions of dollars” in investment and costs.
She told the Financial Post recently that she believes the industry is so interwoven between Canada, the U.S. and Mexico, that trying to pull it apart will ultimately hurt North American competitiveness, a fact which she believes will dissuade the powers that be from making major changes.