¡Ay, Caramba! Ford Addresses $2.5 Billion Investment in Mexico
If you’ve been following the presidential campaign of Donald Trump, you’ll surely have seen where he’s interested in slapping Ford with a 35% tax on all vehicles they assemble outside of the United States and import them for sale in this country. He’s threatening that tax to convince Ford to spend the $2.5 billion in the United States instead of a plant in Mexico.
During the announcement of Ford building the F-650 and F-750 in Avon Lake, Ohio, Joe Hinrichs, president of The Americas at Ford, was asked by a reporter about Trump’s recent claims.
Obviously, Mr. Hinrichs doesn’t want to get into the political aspects of what Mr. Trump is suggesting, but he did have some facts he wanted to share about Ford and Ford’s global production.
The plant that Ford is working on in Mexico is an engine and transmission plant. That plant will not produce complete automobiles. The engines and transmissions constructed in that plant will be used in vehicles that aren’t assembled in the United States, and not sold in the United States.
Of the major automakers, Ford is the leading exporter of vehicles, according to Hinrichs. For example, the Mustang that is being sold globally is built in Flat Rock, Michigan regardless of which market it ends up in.
When it comes to investment, 97% of Ford’s total research and development budget is spent in the United States. That means many global cars are researched right here in the United States.
Ford, like many other automakers, are aware of certain benefits to exporting jobs out of the United States, but Mr. Hinrichs pointed out that Ford is making an effort to import them back. In the past couple of years, Ford has imported 15,000 UAW full-time, hourly jobs back to the United States.
Now, that’s not to say that Ford couldn’t build this new plant in the United States, but I think that a plant that produces equipment that’ll never make it into the United States doesn’t sound as bad as “Ford is moving their production to Mexico and costing jobs.” Ford has never said that their Michigan plant will close, and they haven’t talked about job losses.
Working in a global economy is difficult. Ford, and many politicians, talk at lengths about currency manipulation. It was the subject of a recent event at the Cleveland Engine Plant (Cleveland, which is in Ohio, which is in the United States), and also a key point made during the announcement for the F-650 and F-750. It’s a difficult subject but can change how Ford and other OEMs do business.
Also, key to production in the United States is a strong partnership with the UAW. A receptive, open-minded UAW, combined with an eagerness from Ford to build in the U.S. is how the F-650 and F-750 production can now happen in Ohio, not in Mexico. The fact they have a strong working relationship means we might see even more U.S. job announcements in the future from Ford.
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