Howes: Leave it to pols to get it wrong on Ford, Mexico
Ford Motor Co.’s overdue confirmation that it is moving small-car production to Mexico is grist for another gross oversimplification in this year’s presidential race.
Why let the facts detailing how the global auto industry operates today — and how it allocates capital — muck up the lowest-common-denominator campaign between Hillary Clinton and Donald Trump, or impede their flailing efforts to score cheap political points in the industrial Midwest?
Yet here we have the Republican nominee predicting Thursday that the Dearborn automaker will “fire all of their employees in the United States” — and a CNN anchor asking Ford CEO Mark Fields whether Trump’s allegation is true.
“It’s really unfortunate when politics gets in the way of the facts,” Fields replied, reciting a litany that is not news to followers of Ford or the Detroit-based industry. Reality simply doesn’t support Trump’s cockamamie narrative flogging Ford’s year-long perpetuation of its small-cars-to-Mexico story.
Among the facts: Ford has created 28,000 jobs in the United States over the past five years. It has invested $12 billion in U.S. facilities. It produces more vehicles in U.S. plants, and employs more hourly workers here, than any other automaker. That includes cross-town rival General Motors Co.
Since its deep restructuring during and after the global financial meltdown, Ford concentrated manufacturing and product development in the Midwest; reinvested in heartland plants, even as it bolstered operations in Mexico, too; announced plans for a decade-long renovation of its headquarters campus.
And it’s still controlled by a Ford family that takes the family part seriously. Led by Executive Chairman Bill Ford Jr., they’re all for allocating capital wisely and globally — but not at the expense of the country that birthed the industrial icon and produces most of its profits. Just ask them.
Ford could have dispatched this story a year ago when The Detroit News first reported during national contract talks that the automaker would be shipping production of its Michigan-built Focus, C-Max and hybrids outside the country, likely to Mexico.
For a whole lot of complex reasons politicians and their staffers don’t have the patience to understand, Ford didn’t confirm what all sides knew to be true. Instead executives deferred the announcement until this week’s meeting with investors, which just so happened to fall within the final two months of a presidential cage-match battling over the industrial heartland.
Brilliant, Dearborn. Nothing like handing a rhetorical club to a guy eager to wield it with impunity. Doesn’t matter to him — or Clinton — whether the stubborn facts ruling today’s auto industry support a caricatured and uninformed version of the real world.
It should. Here are some:
The United States is not “losing” more than 4,000 jobs at Michigan Assembly in Wayne because Ford will build small cars in Mexico. United Auto Workers members here will build what Fields called two “very exciting new” products: the compact Ranger pickup (a sop to meet federal fuel economy rules) and what is expected to be a revived iteration of a Bronco SUV.
The number of union jobs lost in the States to this move is zero. Why do you think this compacts-to-Mexico gambit, dropped in the middle of last year’s national contract talks, didn’t emerge as a strike-worthy issue with the UAW? Because union leaders and the rank-and-file know how the industry works, and what they would get, far better than the smart people running for president.
Second, Ford wouldn’t be moving its Focus, C-Max and related hybrids south of the border if more customers wanted those vehicles. But in a world of $2.25-a-gallon gas, surging American energy production and the increasing fuel-efficiency of new crossovers and SUVs, customers don’t need small cars to get the economy they seek.
Third, automakers competing in the U.S. market can’t actually assess market demand and then decide whether to build compacts like the Focus and subcompacts like the Fiesta. The government essentially says they must build them, and their hybrid cousins, to meet corporate average fuel economy targets of 54.5 mpg by 2025 — irrespective of profits or what the market wants.
Fourth, sales volume matters. Because the take rate for those small cars is comparatively low, and so is production, automakers struggle to book profits selling vehicles that, by definition, command lower prices in the market place.
Fifth, labor costs were due to rise after eight years of concessions amid rising U.S. profits, and the automakers knew it. That necessitated a reappraisal of portfolios and production allocations that culminated in Ford’s small-car move and Fiat Chrysler Automobiles NV ending car production in the States.
Finally, both Trump and Clinton are voicing opposition to the Trans-Pacific Partnership and a willingness to reopen the North American Free Trade Agreement. The prospect of greater trade restrictions means the automakers could consider producing vehicles in countries with more liberal trade policies, i.e., Mexico.
Wouldn’t that be interesting? Ford and its global competitors are in the business to make money. They understand the politics of production and jobs better than the two people running for president understand autos — and that’s a problem around here.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.