Ford’s $1.6bn plan for Mexico angers Donald Trump

Ford has announced it plans to invest $1.6bn (€1.4bn) to build more small cars in Mexico, starting in 2018, triggering a fresh blast of criticism from Republican frontrunner Donald Trump.

Mr Trump labelled the move “an absolute disgrace.”

“These ridiculous, job-crushing transactions will not happen when I am president,” the real estate billionaire said in a statement.

Ford stood by comments made two weeks ago by its chief executive Mark Fields, who said the company would not back down on its production strategy.

“We are a global, multinational company and we will invest to keep us competitive and we will do what makes sense for the business,” Mr Fields said.

The car maker announced the investment in Mexico as Mr Trump, US senator Ted Cruz of Texas and Ohio governor John Kasich compete to become the Republican presidential candidate in the November election.

Mr Trump, who has criticised US companies for “sending jobs to Mexico,” has singled out Ford for some of his harshest remarks. 

Ford joins a growing list of car makers investing billions in new production capacity in Mexico, where lower labour costs and favourable currency exchange mean companies have a better chance of turning a profit on low-margin small cars. 

And Mexico’s numerous international free trade agreements allow for more profitable exports from Mexico to many countries, said Sean McAlinden, chief economist with the Center for Automotive Research.

But data indicates Ford builds fewer vehicles and employs fewer workers in Mexico than its Detroit-based rivals, General Motors and Fiat Chrysler Automobiles’ Chrysler unit.

In the US, Ford has 55,300 hourly paid plant workers, GM has 54,000 and FCA has 36,600, the companies said. 

GM has about 12,000 hourly paid workers in Mexico, while FCA has 9,547 and Ford has 6,191, the companies said.

In 2015, 80% of Ford’s North American production came from its US plants, 63% of GM’s North American production came from its US plants, and 64% of FCA’s North American production came from its US plants, according to IHS Automotive.

A senior Mexican official said Mexico had stepped back from a high-profile announcement on the Ford plant to avoid stoking tensions in the US election debate stemming from Mr Trump’s comments.

“Due to the (election) debate, they (Ford) don’t want to be in the spotlight,” the official said, speaking on condition of anonymity. 

“In Detroit, United Auto Workers president Dennis Williams described the new Ford investment in Mexico as “a disappointment and very troubling.”

Reuters


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