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Newequipment 2471 Flat Rock 2015 Getty
Newequipment 2471 Flat Rock 2015 Getty
Newequipment 2471 Flat Rock 2015 Getty
Newequipment 2471 Flat Rock 2015 Getty
Newequipment 2471 Flat Rock 2015 Getty

Trump Wins in Automaker Attack as Ford Abandons Mexico for Michigan

Jan. 4, 2017
Ford will manufacture its autonomous and electric vehicles in Flat Rock, Mich., not at a planned $1.6B Mexican plant. The move, expected to create 700 jobs, is another major victory for President-elect Trump.

Authors: David Welch and Keith Naughton

President-elect Donald Trump on Tuesday notched the biggest victory of his campaign to get automakers to keep jobs in the U.S. when Ford Motor Co. canceled a $1.6 billion Mexican expansion, saying it would add positions in Michigan instead. 

The company’s announcement culminated a dizzying morning that started with Trump threatening to punish General Motors Co. for building a version of its fading compact car in Mexico. GM challenged his assertions, but minutes later Ford -- a frequent target of Trump’s campaign-trail criticism -- struck a different note.

Ford CEO Mark Fields at the Flat Rock Assembly Plant announcement.
Photo: Ford Motors

The Ford decision reverberated on the first trading day of 2017, with its shares rising 3.5 percent to $12.57 at 3:28 p.m. in New York. The Mexican peso weakened beyond 21 to the dollar on concern that Trump is succeeding in curtailing investment in the country. In a statement, the Economy Ministry said Mexico “regrets” the automaker’s move and remains committed to the 1994 North American Free Trade Agreement.

The auto industry has been a special prize for Trump, conjuring visions of a thriving, 1950s-era Detroit where shift work created jobs that paid for mortgages, college educations and an annual vacation. His feud with the auto industry emerged during the campaign. He appeared eight times in Michigan, driving home a message that he would cancel Nafta, which he blamed for sending auto-factory jobs to Mexico. Trump was the first Republican presidential candidate to win the state since George H.W. Bush in 1988.

Companies aside from Ford may find it more advantageous to work with Trump rather than to battle his unprecedented social-media reach and willingness to get involved in individual deals.

“You’re just setting yourself up to lose,” said Joe Watkins, a Pennsylvania-based Republican consultant and former aide to the first President Bush. “He can continue to keep you front and center in the news just with a single tweet, so why do you want to engage in a fight?”

Fields said the decision to scrap the new compact-car plant in Mexico reflected shifting consumer tastes, not pressure from the president-elect. While Ford did notify Trump and Vice President-elect Mike Pence before the announcement, Fields said the same decision would’ve been made regardless of Trump’s comments.

Mexico Agreements

There is no tariff on cars built in Mexico and shipped over the border for sale in the U.S. Mexico’s government has courted car companies around the world by entering into 13 free-trade agreements with 44 countries that make up 60 percent of the global gross domestic product. The country has tariff-free access to 47 percent of the worldwide vehicle market, compared with 9 percent for the U.S.

Mexico Boom

Nine global carmakers, including Toyota Motor Corp. and Nissan Motor Co., have announced more than $24 billion in Mexico investments since 2010.  BMW AG, Daimler AG and Volkswagen AG’s Audi each build or plan to assemble luxury vehicles, engines or heavy trucks in the country.

Toyota, which broke ground in November on a $1 billion plant in Guanajuato, has made no change in plans to build Corolla compacts there from 2019, spokeswoman Kelly Stefanich said. BMW AG’s construction of a 3 Series sedan plant in San Luis Potosí is “moving briskly along” in order to start production the same year, according to spokesman Kenn Sparks.

Nissan, which together with Daimler is investing $1 billion in a plant in Aguascalientes, said its business plans “remain unchanged,” according to spokesman Brian Brockman. The Mexican plant is scheduled to start producing cars this year.

Fields on Tuesday expressed skepticism that Trump would slap a 35 percent tariff on the Focus, which will still be built in Mexico.

“The right policies will prevail because we share the same aspirations that I think the president-elect does -- we want a very strong U.S. economy,” Fields said. “The president elect has run on many of these stances and he seems to be a man of his word.”