Trump ‘influenced’ decision to keep Lincoln SUV in Ky.

Melissa Burden, and Michael Wayland
The Detroit News

President-elect Donald Trump “influenced” Ford Motor Co.’s decision to keep production of a Lincoln SUV in Kentucky instead of shipping it to Mexico, ranking officials confirmed Friday.

The confirmation came a day after the billionaire businessman was in Indianapolis for a press conference with air-conditioner manufacturer Carrier Corp., where Trump said as many as 1,100 jobs would stay in Indiana instead of moving to Mexico.

Trump in a late-night tweet two weeks ago indicated he had a hand in keeping Lincoln MKC production in Kentucky. That surprised many United Auto Workers officials and rank-and-file members who did not know the compact crossover had been slated for Mexico.

Ford confirmed the plans then, but did not respond to questions on when it made its decision or if Trump and his criticism of Ford moving small-car production to Mexico had any influence on it. The Louisville plant builds the Ford Escape and MKC, and Ford planned to ship the MKC to Mexico by the end of 2019.

“Clearly, our thinking about policies and pro-growth policies influenced our decision,” Bruce Hettle, Ford’s group vice president of manufacturing and labor, told The Detroit News on Friday.

Hettle said the company had been reviewing the plant’s capacity use and had been in discussions with the Trump administration and the UAW.

“When we did the UAW contract, the environment and the business looked like we were oversubscribed and that we couldn’t make market demand. And frankly, it doesn’t look like that now,” Hettle said. “We were thinking about: ‘do we keep the vehicle in the plant or do we move the vehicle to Mexico?’”

Hettle said senior UAW leaders knew of its decision before Trump tweeted the news; Ford officially sent a notice to employees the following day.

On UAW Local 862’s Facebook page the day after Trump’s tweet, the unit representing hourly workers at the Louisville plant downplayed any Trump influence: “The decision to keep the Lincoln at LAP had nothing to do with President-elect Trump, whatsoever. He released the information before it could be communicated to the employees. #SOLIDARITY.”

Trump repeatedly assailed Ford during his campaign for investments in plants in Mexico, and for planning to move production of the Ford Focus and C-MAX from its Michigan Assembly Plant in Wayne to Mexico.

Ford Chief Financial Officer Bob Shanks on Friday said Ford’s plans for the Focus — and its shift to Mexico — have not changed. Ford would not say what will happen to the C-MAX.

The Focus and C-MAX have been slow sellers as consumer preferences shift to SUVs and trucks. Ford is cutting North America production during the fourth quarter, and Hettle confirmed Michigan Assembly would take an additional week of downtime around the Christmas holiday.

Trump has indicated he would end the trade pact with Canada and Mexico and slap a 10 percent to 35 percent tariff on vehicles and parts made in Mexico that are imported into the U.S. He also has threatened tariffs of up to 45 percent exported from China to the U.S.

The company, according to Shanks, is optimistic that the Trump administration will be “a very pro-growth administration in terms of policies.”

Shanks: EPA ‘misguided’

Shanks said Ford strongly objects to the U.S. Environmental Protection Agency moving quickly, and before Trump takes office, to finalize stringent gas mileage rules that require automakers to produce car and truck fleets averaging more than 50 miles per gallon by 2025.

“This is obviously in effort by an outgoing administration who’s concerned about what the new one will do and trying to change the rules of the game,” he said. “That’s unfortunate. We think it’s completely misguided and inappropriate.”

The Corporate Average Fuel Economy (CAFE) and Greenhouse Gas (GHG) emissions standards that were issued jointly by the EPA and the U.S. Department of Transportation are subject to review by April 2018. But EPA Administrator Gina McCarthy is proposing that the agency issue a final decision to keep its portions of the regulations in place after taking comments until Dec. 30, 2016.

Many believe Trump’s stance on deregulation would include rolling back the fuel-economy standards, which Shanks argues were implemented for a future that envisioned higher gas prices and plug-in hybrid electric vehicles.

“The market realities are that that is not what people are willing to buy,” Shanks said. “It’s not because we don’t want to sell it. We have them, and we will have even more.”

Ford plans to invest $4.5 billion in electrified solutions — including 13 new electric vehicles — by 2020. The company does not have plans to diverge from its electric vehicle strategy regardless of regulations. However, Shanks said changing timing or adding ways automakers achieve credits would be beneficial.

“All that we’re doing is saying, ‘Guys, just recognize the reality of the world that we’re now living in is not what we expected, so let’s agree that we’ll keep moving in the direction we’re moving in,” Shanks said. “But do it in a way that doesn’t destroy us or make the vehicles unaffordable to customers’ because that’s the path that we’re presently on.”

‘Balkanized marketplace’

The new emission standards began to take effect with the 2017 model year. They call for ramping up from the current fleet-wide average of about 34 miles per gallon for cars and trucks that were required in 2016 to an eventual goal of 54.5 miles per gallon by 2025.

If the regulations do get pulled back or even finalized, California and other so-called “PZEV states” that have adopted California’s stringent Partial Zero-Emissions Vehicle regulations remain the wild cards.

David Strickland, the former administrator of the National Highway Traffic Safety Administration, previously told The Detroit News that if the Trump administration does target fuel-economy regulations, it could cause a “balkanized marketplace” because of differing state regulations.

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