Ford CEO Mark Fields speaks during the opening ceremony of the China Development Forum at the Diaoyutai State Guesthouse in Beijing, (AP/Mark Schiefelbein)
MICHIGAN– Following his election last November, President Trump – while still president-elect – sent “strong hints” to U.S.-based car companies via Twitter in an attempt to convince them to stop sending U.S. auto manufacturing jobs overseas.
After Trump’s tweets targeted General Motors, Ford announced just hours later that they were canceling their planned $1.6 billion auto plant in San Luis Potosi, Mexico and would instead build some auto components in an already existing plant in the Mexican city of Hermosillo.
Ford had originally planned to move the production of the Ford Focus to Mexico in order to take advantage of lower labor costs.
At the time, Ford announced that it would instead put those funds to work in the U.S., investing $700 million in an expansion of its existing auto plant in Flat Rock, Michigan. According to Ford, the shift in company policy would create 700 new jobs in the area and would safeguard approximately 3,500 existing U.S. jobs.
Ford’s then-CEO Mark Fields told CNN at the time that the decision was a “vote of confidence” in Trump’s promise to create a pro-business environment. Trump wasted little time celebrating on Twitter.
"@DanScavino: Ford to scrap Mexico plant, invest in Michigan due to Trump policies"https://t.co/137nUo03Gl
— Donald J. Trump (@realDonaldTrump) January 3, 2017
Ford said last week that it will expand in Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford & Fiat C!
— Donald J. Trump (@realDonaldTrump) January 9, 2017
However, one of Trump’s earliest “victories” may have been short-lived, as Ford announced on Tuesday that it will move production of the Focus offshore to China, abandoning its existing plant in Mexico altogether and putting U.S. jobs in the crosshairs.
Bloomberg reported that the move will make the Focus the biggest automotive export ever from China to the United States. Lower labor costs were ultimately the deciding factor, as Joe Hinrichs, Ford’s head of global operations, stated that Ford would save as much as $1 billion in the decision to outsource jobs to China.
Hinrichs further argued that the savings were so significant that even if Congress or the president pushed for tariffs on foreign-made goods, it would still be a financially sound decision.
Despite the clear consequences of moving Focus production – which currently takes place in Michigan – Ford has asserted that no U.S. jobs will be lost in the process. They also attempted to distract from their offshoring shift by touting their plans to invest in a Kentucky factory in the same press release.
But unless Ford massively increases its market share and/or manages to permanently increase global and domestic demand for Ford cars, shifting production to China inevitably means that production must decline elsewhere – in this case, the United States.
In addition, while Trump was quick to gloat after Ford’s January decision to cancel its planned Mexican factory, the Trump administration has been incredibly evasive in commenting on Ford’s most recent announcement. White House Press Secretary Sean Spicer declined to respond to questions about Ford’s decision on Tuesday while the only statement issued by a member of the administration came from Commerce Secretary Wilbur Ross. In a statement, Ross said that Ford’s decision “shows how flexible multinational companies are in terms of geography.”
White House conspicuously muted on Ford moving Ford Focus production to China. This statement from Wilbur Ross is the only reaction pic.twitter.com/998fOsetnm
— Jeremy Diamond (@JDiamond1) June 20, 2017
One would normally expect Trump to come out swinging at Ford’s apparent change of heart regarding their previous “vote of confidence” in his presidency. His continued silence suggests that Trump’s major policy goals of bringing back and keeping U.S. jobs in the country may have become the latest about-face in Trump’s young presidency.
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