Republican presidential candidate Donald Trump speaks at a rally at the Milwaukee Theatre Monday, April 4, 2016, in Milwaukee. (AP Photo/Charles Rex Arbogast)
Perhaps Ford MotorF -1.25% is tone deaf. Why else would it choose Primary Day in Wisconsin, a hard-working Rust Belt state where trade agreements and labor rights are sore subjects, to announce that it plans to invest $1.6 billion for a new factory in Mexico?
It’s not like the announcement wasn’t expected. Ever since Ford announced last July that it would end small car production at a Michigan factory that been supported by $5.9 billion in federal loans for fuel-efficient cars, it was inevitable that a new, lower-cost factory would pop up south of the border.
But today’s plan, which will create 2,800 new jobs for Mexican workers, will surely feed into anti-trade messages from Trump and Democrat Bernie Sanders in this hotly contested presidential campaign.
Ford is certainly not the only automaker investing heavily in Mexico. As I wrote back in the September 8, 2014 issue of Forbes magazine, Mexico is quickly becoming North America’s car capital. Favorable trade agreements and well-trained, lower-cost workers make it an ideal location for exporting vehicles not just to the U.S. and South America, but also to Europe and Asia.
Still, it’s a thorny subject. UAW President Dennis Williams weighed in quickly: “Today’s announcement that Ford is investing in Mexico is a disappointment and very troubling. 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 (proposed Trans-Pacific Partnership) 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.”
No doubt aware of the furor it might cause, Ford notably left the word “Mexico” out of the headline on its press release today: “Boosting Small Car Profitability, Ford Invests In New Plant.” Ford also played up its 91-year presence in Mexico (in other words, it’s not chasing low-cost labor) and the nearly 200 schools it has built in rural areas throughout the country.
The plant in San Luis Potosi State “will further increase Ford’s competitiveness,” the company said. Mexico is Ford’s fourth largest vehicle manufacturing site in the world – behind the U.S., China and Germany. And just to remind people of its global nature, Ford says in the past five years it has invested more than $10.2 billion in the U.S.; $2.7 billion in Spain, $2.4 billion in Germany and – with the company’s partners – $4.8 billion in China.
In April, Ford said it would invest $2.5 billion in Mexico for two engine and transmission plants, creating 3,800 jobs.
UPDATE: For the record, a Ford spokeswoman says “the decision to make the announcement today was based on the need to get started with construction on the new plant. We also needed to coordinate with other organizations that were involved.” She adds that Ford has hired 25,000 workers in the U.S. in the past five years and that it produces more cars and employs more hourly workers in the U.S. than any other carmaker.