Ford scraps plan for Mexico plant to put assembly line in Michigan

 

Ford has cancelled plans for a $1.6bn Mexican plant and vowed to make future electric and self-driving cars in Michigan, following threats from Donald Trump to impose punitive tariffs over its plans to shift manufacturing south of the US border.

The company said yesterday that “tax and regulatory reforms” proposed by the president-elect led to its decision to invest $700m in its factory in Flat Rock, Michigan, where it will create 700 jobs and build a suite of new electric and hybrid vehicles, and to abandon its project in San Luis Potosi, Mexico.

The decision came after stinging criticism from Mr Trump on the campaign trail over Ford’s plans to move production of smaller cars to Mexico, and just hours after the president-elect threatened General Motors with a “big border tax” over its Mexican production. It also came the same day the property tycoon picked a longstanding protectionist to serve as US trade representative.

“Instead of driving jobs and wealth away, AMERICA will become the world’s great magnet for INNOVATION & JOB CREATION,” Mr Trump tweeted after the Ford announcement, for which his team claimed credit.

Mr Trump campaigned on a promise to force US companies to bring manufacturing jobs and offshore factories home. Since winning in November, he has used his Twitter bully pulpit to criticise some of the biggest US companies, from Boeing and Ford to the air conditioning company Carrier, which also reversed a plan to move hundreds of production jobs to Mexico.

Mr Trump has also vowed to renegotiate the North American Free Trade Agreement with Canada and Mexico, under which Ford and GM are allowed to produce cars in those countries and sell them to US customers tariff-free.

Mark Fields, Ford chief executive, said he was “encouraged” by policies Mr Trump and the new Congress will pursue: “We believe that these tax and regulatory reforms are critically important to boost US competitiveness and drive a resurgence in American manufacturing and high-tech innovation.”

Ford said it would move production of the Focus car from its plant in Wayne, Michigan, to an existing facility in Hermosillo, Mexico, but said it would be replaced by new vehicles at the US site.

In October, Ford idled the Flat Rock plant following declining sales of the Mustang. The company said the $700m investment in Flat Rock, which employs 3,700 workers, would come from the money saved by not building the Mexican site, though it did not say where it would invest the rest of the money.

Earlier yesterday, Mr Trump tweeted: “General Motors is sending Mexican made model of Chevy Cruze to US car dealers tax-free across border. Make in USA or pay big border tax!” GM, which saw its shares briefly dip, responded by pointing out that the vast majority of Cruze are already produced in the US.