In San Luis Potosi, where it was to be build, locals like Ana Rodriguez lamented the lost jobs: “We always do the work that they don’t want to do, so I want to see what will happen if he builds the factory in the United States, and see the Americans wanting to do the jobs that we were going to do, and of course it affects us a lot too because a lot of people who do not have work were going to have the opportunity, and now they no longer have that opportunity.”
Ford insisted the change of plans was based on a decline in North American demand for small cars like those that would have been made at the Mexican plant and has nothing to do with Trump’s criticism.
However Ford Chief Executive Mark Fields did tell reporters: “This is a vote of confidence for President-elect Trump and some of the policies he may be pursuing.”
The Mexico plant would have meant investment of $1.6 billion (1.53 billion euros) and would have created 2,800 jobs. Instead Ford will expand its US plant in Michigan to produce electrified and automated vehicles at a cost of $700 million (668 million euros), creating 700 jobs.
Cancellation costs
The decision to cancel the Mexico plant means it will have to compensate the local government for infrastructure spending, though no figure has been made public.
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) 3 gennaio 2017
San Luis Potosi State Governor Juan Manuel Carreras said: “The state government and Ford Motor Company will proceed in accordance with the terms of the agreement in order to apply the agreed rules for early termination, which imply, in this case, a total refund by the company for all the money spent by the state government on this project to date.”
Ford’s change of heart came just hours after Trump used Twitter to attack the biggest US carmaker General Motors over its production in Mexico. He threatened to impose big taxes on cars made there and then imported into the US.
He cannot actually do that under the terms of NAFTA – the North American Free Trade Agreement -which all but eliminated tariffs on goods shipped among Canada, the US and Mexico, but Trump plans to renegotiate or even scrap NAFTA, which would likely lead to retaliation by Mexico.
GM said it sold about 190,000 Cruze cars in the United States in 2016. All of the sedan versions sold in the US, or about 185,500, were built at its plant in Lordstown, Ohio. About 4,500 hatchback versions of the Cruze were assembled in Mexico and sold in the United States.
“GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the US” it said in a statement posted on its website.
Contingency plans
Trump’s GM comments marked his latest broadside aimed at an American company over jobs, imports and costs before he takes office on January 20, signalling an uncommon degree of intervention for an incoming US president into corporate affairs.
James Nolt of the World Policy Institute said more companies are trying to prepare for Trump’s policy changes.
“I’ve already read that Apple, for example, has done a contingency study to see how much it would cost if they moved manufacturing back from China to the United States,” Nolt said.
“Other companies are probably doing the same sort of thing. They’re making contingency plans. What if Trump is really serious about this? How could it affect our costs? How could we reallocate production to be able to take advantage of this new environment? So, a lot of companies and people are assessing Trump to see whether he’s serious, or whether his campaign rhetoric was hollow, and I think, increasingly, the evidence is he’s serious.” (Euronews)