Trump had told the congregation, “It was just announced that Ford is moving all small auto production – all of it, 100 percent – to Mexico over the next two to three years”. It’s no big secret that vehicle manufacturers have been struggling for years to make a profit on small cars and hatchbacks, and with the American consumer favoring pickups, SUVs, and crossovers, this move was to be expected and it’s not a surprise, either.
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Earlier it was reported that Ford Motors was planning to build a new auto assembly facility in Mexico which would cost around $1.6 billion.
In April, Trump called Ford’s plans to move production to Mexico as an “absolute disgrace”. Ford still produces plenty of its North American vehicles here, and in the most recent round of contract negotiations with the United Auto Workers union, the automaker committed to investing another $9 billion in U.S. facilities, and creating or retaining as many as 8,500 domestic jobs.
Lower profit margins for small cars are an industry-wide issue, and have led to many automakers shifting manufacturing to lower-cost zones. Jeff Schott, an expert on trade at the Peterson Institute for International Economics in Washington, countered that these agreements can reduce costs for US exporters, as well.
Ford is looking at other ways to cut costs too. Ford is reducing that to 300 in 2017 and 30 in the next-generation Focus.
In Michigan, Ford’s announcement didn’t come as a great surprise.
Ford is focusing its electric vehicles on its areas of strength – commercial vehicles, trucks, utility and performance vehicles.
The automaker also reiterated its commitment to developing an autonomous vehicle by 2021.
However, UAW President Dennis Williams has repeatedly criticized Ford and other automakers for investing so much money in Mexico.
Ford said it “plans to achieve cost efficiencies averaging $3 billion annually between 2016 and 2018 and is adding new processes like zero-base budgeting to further its business transformation”.
Ford shares have fallen 12% from the beginning of the year from $14.09 to Tuesday’s closing price of $12.38.
“What we announced is that we’ll be moving our focus out of MI so that we can compete more financially in that particular segment but at the same time, that’s an agreement we have with the UAW”, Fields said.
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“That’s why we are expanding to sell more vehicles and provide transportation services at the same time”.
