Ford puts US$200M cost on Mexico closure

SOUTHFIELD, MICH. • Ford Motor Co. revealed Thursday the price paid for its aggressive push to curry favour with President Donald Trump: US$200 million.

Within fourth-quarter results that met analyst expectations, Ford said it took a US$200 million charge to cover the cost of abandoning a small-car factory in Mexico that would have built the Focus compact. The automaker announced the turnabout earlier this month after Trump, as candidate and president-elect, sharply criticized its plans south of the border.

The move may end paying off in the long run and is peanuts for a US$49 billion company. Ford said it’s actually saving US$500 million by not completing construction of the Mexico factory. Since that decision, the automaker has worked its way into Trump’s good graces and is now looking to parlay that relationship into more lenient regulations and tax breaks that could boost profits. Chief executive officer Mark Fields met twice this week with Trump, who also speaks regularly with executive chairman Bill Ford.

The jockeying underscores how Ford’s financial well-being will be linked the next four years to the whims of a White House taking special interest in where cars are built and how fuel efficient they’ll have to be.

“The president is going to be very good for business and the economy,” Fields said in an interview with Bloomberg Television on Thursday. Still, the U.S. market has “plateaued,” he said. “We don’t have any plans to build any new plants, but clearly we want to continue to grow our business.”

Abandoning the Mexico plant contributed to a quarterly net loss for the company, its first since 2009. Excluding charges related to the factory cancellation and a pension plan loss, Ford reported profit of US30 cents a share, matching analysts’ estimates.

Ford reiterated earnings will drop this year as it begins to invest about US$4.5 billion toward electrification and spends on self-driving vehicles. The shares fell as much as 3.4 per cent as Chief Financial Officer Bob Shanks said on a conference call there may be puts and takes to a Trump presidency.

“While there’s a lot of enthusiasm and we’re all very optimistic about what may come out of the new administration in terms of growth policies, there’s also more uncertainty, there’s more volatility, potentially,” Shanks said.

Ford reported a net loss of about US$800 million last quarter, compared with income of US$1.9 billion a year earlier. Excluding the pension-related charge, profit fell 18 per cent to US$2.13 billion.

Ford will still move production of Focus compacts to an existing Mexico factory, though it’s also plowing US$700 million into a plant south of its headquarters in Dearborn, Michigan.

The investment Ford announced in Flat Rock, near Detroit, will prime the plant to build an all-electric sport utility vehicle and hybrid An employee works on the engine of a Ford Fiesta at the Ford Motor Co. plant in Cuautitlan Izcalli, Mexico, in 2010. Mustang pony car by 2020, plus an autonomous vehicle for ride sharing or hailing services the following year.

Ford has said outlays on electrification and self-driving cars will lead to a oneyear blip that should give way to higher net income in 2018. It’s starting this year with plans to dial back production in North America by about 39,000 vehicles compared with a year earlier, to 815,000 cars and trucks.

Fields has expressed confidence Trump follows through on promises to cut corporate taxes and create a more favourable business environment, which could mean easing environmental regulations the president referred to this week as “out of control.”

Strong sales of sport utility vehicles and trucks last year propelled Ford to a US$10.4 billion annual pretax profit, down from US$10.8 billion in 2015 but still its second-best annual total. breakfast sandwich. To attract the on-the-go crowd, Starbucks also is expanding its snack-based meals called Bistro Boxes.

Its mobile ordering and payment platform, meanwhile, has helped speed up lines at its U.S., Canadian and U.K. cafés. The company is planning to expand this capability to more markets abroad. In the U.S., mobile payments already account for about 27 per cent of transactions.

Schultz, who has served two terms as head of Starbucks, will hand the reins to technology veteran Kevin Johnson in April. The announcement initially jarred investors, but the company has since bolstered its board with nominations for new directors.

The additions include Sam’s Club CEO Rosalind Brewer; Jorgen Vig Knudstorp, executive chairman of the Lego Brand Group; and Microsoft Corp. CEO Satya Nadella.

Schultz, 63, will keep the role of executive chairman of Starbucks.

“He’s tried very hard to reassure people that he won’t be far away,” Bartashus said. “I think there’s a little bit of a wait-and-see attitude toward what Kevin Johnson can achieve.”