Ford Motor Co last week scrapped a planned Mexican car factory and added 700 jobs in Michigan following criticism by Donald Trump, as the U.S. president-elect turned his attention toward rival General Motors Co with the threat of a “big border tax” over compact cars made in Mexico.
Ford CEO Mark Fields called the move “a vote of confidence” in Trump, but primarily a response to a decline in North American demand for small cars like those that would have been made at the Mexican plant. He said Ford would have made the same decision even if Trump had not been elected.
Ford will cancel plans unveiled in April to spend $1.6 billion to build the new plant in San Luis Potosi, Mexico, a project Trump urged the automaker to abandon and called an “absolute disgrace” during the election campaign.
The No. 2 U.S. automaker also said it would invest $700 million to expand the Flat Rock, Michigan factory and would make new electric, hybrid and autonomous vehicles there.
Trump’s efforts to browbeat the U.S. car industry show he may go further than other modern presidents to try to influence corporate decisions, especially those related to trade and investment.
Mexico’s government said it regrets Ford’s decision and has ensured that the company will reimburse San Luis Potosi state for any costs associated with the investment.
“Obviously, this isn’t a good decision for us,” said Mexico’s economy minister, Ildefonso Guajardo.
Ford said it still will shift production from Michigan of its Focus compact car to an existing plant in Hermosillo, Mexico. Fields said he expects Michigan to give incentives for Ford’s investment in Flat Rock. (Fortune)