Republican presidential candidate Donald Trump on Tuesday slammed Ford Motor Co.’s decision to build a $1.6 billion assembly plant in Mexico as an “absolute disgrace” that would not happen if he becomes president.
“Our dishonest politicians and the special interests that control them are laughing in the face of all American citizens,” Trump said in a statement on the day of the presidential primary in Wisconsin — a rust-belt state that, like Michigan, has lost manufacturing jobs. “These ridiculous, job-crushing transactions will not happen when I am president.”
Trump reacted hours after the Dearborn automaker confirmed plans to build small cars at a new plant in the Mexican state of San Luis Potosi. The announcement prompted a similar scathing reaction from the leader of the United Auto Workers union.
The billionaire businessman has singled out the automaker for months on the campaign trail for its investments in Mexico, after Ford announced last year it would invest $2.5 billion in engine and transmission plants there. Shortly after declaring his candidacy in June, Trump vowed he would impose a 35 percent import tariff on any cars built in Mexico that Ford tries to sell in the U.S.
Ford did not respond directly to Trump’s attack on Tuesday, or to criticism by the UAW.
The latest investment announcement comes during a heated presidential primary in which trade deals and the loss of American jobs have become the center of campaign rhetoric for Trump and Democratic presidential candidate Bernie Sanders. Automakers including Ford, Toyota and General Motors Co. have invested heavily in Mexico to build less-profitable small cars because of Mexico’s low labor costs and favorable trade deals for exporting vehicles made there.
Public perception about moves by Ford and others to Mexico have been largely unfavorable. Many believe automakers are abandoning jobs and production opportunities stateside. By contrast, little is made of investments in other parts of the world, such as Ford’s $170 million investment in South Africa that also was announced Tuesday and largely went unnoticed.
“Mexico’s a raw nerve for political leaders and certain segments of the voting population,” said Kristin Dziczek, director of the Industry & Labor Group for the Center for Automotive Research. “I don’t think Ford Motor Co. makes their announcements according to a political calendar. All of the automakers are growing their presence in Mexico. It’s not just cheap labor, it’s trade access to the rest of the world.”
Ford said it will start construction on the Mexico plant this summer. It says it will produce vehicles in 2018 and create 2,800 direct jobs by 2020. Most vehicles built at the plant will be for the North American market, with the majority exported to the U.S., according to Ford.
Joe Hinrichs, Ford’s President of the Americas, said the move was about increasing profitability of its small cars. He would not comment on how many or what cars the plant would produce, or how many the plant could make per year. Reuters has reported the plant will produce up to 350,000 vehicles annually.
Ford last year said it would stop building its Focus and C-Max cars at its Michigan Assembly Plant and move production elsewhere. UAW officials said at the time that at least the Focus would move to Mexico. Ford executives have said they’re looking for a cheaper option to build lower-profit vehicles like the Focus and C-Max. Mexico would represent such an opportunity, but Hinrichs on Tuesday would not confirm those vehicles would be built at the new plant.
Ford executives have said the departure of the Focus and C-Max from Michigan Assembly would not result in a loss of jobs, and the new UAW contract stipulates two new vehicles will come to the plant by 2020. Ford entered negotiations with plans to resurrect its Ranger pickup at the plant, and reports have said Ford plans to bring back its Bronco SUV there.
Tuesday’s announcement drew the ire of UAW President Dennis Williams, who has berated U.S. trade policies for taking work outside the country. It comes months after Williams negotiated with Detroit’s three automakers for raises and job commitments to the union’s autoworkers as part of a four-year contract.
“Today’s announcement that Ford is investing in Mexico is a disappointment and very troubling,” Williams said in a statement. “For every investment in Mexico, it means jobs that could have and should have been available right here in the USA. This is another example of what’s wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States. Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.”
Hinrichs on Tuesday noted that Ford last year built 80 percent of its North American vehicles in the U.S., and last year it built more cars and trucks here than any other automaker. During the last five years, Ford has invested $10.2 billion in the U.S. and has created 25,000 jobs, Hinrichs said. In its new contract with the UAW, Ford committed to investing an additional $9 billion in the U.S. through 2019.
In 2015, Ford moved production of its medium-duty trucks from Mexico to its Ohio Assembly Plant in Avon Lake, a deal worked out during the previous contract with the UAW.
“The facts bear out that our investment in the U.S. continues to be substantial,” Hinrichs said. “The investments in Mexico are not having an offsetting effect in the U.S.; we’re not losing any jobs at Michigan Assembly Plant or southeast Michigan.”
Last year, Ford announced it will invest $2.5 billion for two new engine and transmission plants in Mexico and an expansion of a diesel engine line that will create about 3,800 jobs.
Ford says Mexico is its fourth-largest manufacturing site, behind the U.S., China and Germany. It employs about 8,800 in Mexico — roughly one-tenth its number of U.S. workers, Ford said.
GM last year announced a $5 billion investment there over six years and Toyota said it will invest $1 billion in a Mexican plant. Fiat Chrysler Automobiles NV, BMW AG, Volkswagen AG and its Audi unit, Nissan Motor Co. and Kia Motors also have built or announced new plants or plant expansions there.
Automotive research firm IHS says Mexican production has more than doubled in the past decade, and expects it to top 5 million vehicles annually by 2020. During that same period, production in the United States is expected to hit 12.3 million, up from 11.8 million in 2015.
Mike Jackson, a forecaster for IHS Automotive, said he believes Ford is prioritizing its resources and production.
“Ford wants to ensure that it’s competitive for the long haul,” he said. “Clearly, labor has one point of view. But what we’re looking at here is Ford recognizing, in light of all the investments it has made previously, that even under a wholesale price environment, it has to maintain a competitive investment to continue to maintain momentum and its position in that small car space.”
Michael Wayland contributed.