When Trump’s taunts cowed Ford, Mex­ico town paid the price

The Hamilton Spectator - - BUSINESS - AN­DREA NAVARRO

It juts up from the vast arid plains of cen­tral Mex­ico, a hol­low shell of steel beams that serves as a har­bin­ger of the dam­age Don­ald Trump’s “Amer­ica First” push could wreak on trade part­ners across the globe.

This was to be no or­di­nary auto plant. The Ford Mo­tor Co. project, about four hours north of Mex­ico City, was hyped as the re­gion of San Luis Po­tosi’s big­gest pri­vate in­vest­ment ever, a $1.6-bil­lion fa­cil­ity that would have em­ployed al­most 3,000 peo­ple.

San Luis Po­tosi state still owes money on the land it bought and do­nated to Ford. Now, it’s scram­bling to re­gain con­trol of the aban­doned site and find a new ten­ant. That’ll be no easy feat as the U.S. pres­i­dent floats the idea of a bor­der tax of up to 20 per cent and con­tin­ues his Twit­ter at­tacks against Amer­i­can com­pa­nies that ship jobs abroad. When Ford up and scrapped its project on Jan. 3, it be­came at least the sec­ond for­eign com­pany i n Mex­ico to bow to the pres­sure.

“Ford was go­ing to be the en­gine to make us grow faster,” said Gus­tavo Puente, head of the state’s eco­nomic de­vel­op­ment of­fice. “The worst part has been the un­cer­tainty about what Trump’s poli­cies will do.”

Ford has said its de­ci­sion was in­flu­enced by de­mand, not­ing in an emailed state­ment that it’s “work­ing with the lo­cal com­mu­nity to en­sure we do the right thing.”

“We can­celled the plant down in Mex­ico be­cause the bot­tom line is we saw what was hap­pen­ing with” slow­ing small car sales, chief ex­ec­u­tive of­fi­cer Mark Fields told an­a­lysts on Jan. 26. “We didn’t need the ca­pac­ity any more and it didn’t make any sense to add it.”

For the folks of San Luis, it’s been a crush­ing blow. On the day of the Ford an­nounce­ment, a lo­cal mo­mand-pop equip­ment rental ser­vice there watched a fourth of its in­come go with it. And if Gen­eral Mo­tors or BMW pack up, too?

“We’ve heard ru­mours that oth­ers may leave,” said Karla Chavez, an ad­min­is­tra­tor at the Mapein equip­ment-rental com­pany, which earned about $4,000 a month from the Ford project and ex­pected more con­tracts over the next sev­eral years. “All we can do is wait.”

One of ev­ery eight work­ers in San Luis is em­ployed by the auto sec­tor, all of it made pos­si­ble by the decades-old North Amer­i­can Free Trade Agree­ment that’s pro­pelled mil­lions of Mex­i­cans into the mid­dle class and which Trump is now threat­en­ing to shred. In his in­au­gu­ral speech, he blamed such ac­cords for steal­ing Amer­i­can jobs. Hos­til­i­ties be­tween Trump and his coun­ter­part, En­rique Pena Ni­eto of Mex­ico, could de­rail $584 bil­lion in trade be­tween the bor­der na­tions.

Trump last month de­manded Mex­ico pay for a bor­der wall, and Pena Ni­eto re­sponded by can­celling an of­fi­cial state visit. As re­la­tions be­tween the two lead­ers de­te­ri­o­rate, the ner­vous­ness that tinged con­ver­sa­tions at cafés and job lines in San Luis is turn­ing into panic.

“So many jobs were com­ing. Now, ev­ery­one is ask­ing man­age­ment if they’re go­ing to pick up and leave,” said Javier Her­nan­dez, who as­sem­bles trans­mis­sions for Ea­ton Corp. “We’re also won­der­ing if de­mand is go­ing to go down. Maybe they’ll have to fire peo­ple.”

None of that bodes well for San Luis Po­tosi state, which do­nated 220 hectares of the 280-hectare plot to Ford. The city gov­ern­ment do­nated the rest. Ford’s pres­i­dent of the Amer­i­cas, Joe Hin­richs, said af­ter the can­cel­la­tion that the com­pany will re­turn the land to the gov­ern­ment of Mex­ico. Ford plans to build the Fo­cus com­pacts at its ex­ist­ing plant in Her­mosillo, Mex­ico.

SU­SANA GON­ZA­LEZ, BLOOMBERG

A steel struc­ture is all that re­mains af­ter Ford halted plans for a new ve­hi­cle assem­bly plant in San Luis Po­tosi.

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