Friday, November 18, 2016

The Reason Ford Isn't Moving Line To Mexico Isn't Great News For U.S.

Joann Muller
Nov. 18, 2016

President-Elect Donald Trump’s promise to keep jobs in America is already bearing fruit, or so it would appear by his announcement Thursday night — on Twitter, of course — that Ford would not be moving some vehicle production to Mexico.


Trump got the details wrong: Ford’s plan was to move production of just one vehicle, the Lincoln MKC, from its Louisville, Kentucky plant (likely to Mexico) so it could build more Ford Escapes on the line. The factory is staying put. Nevertheless, that plan, it appears, is now off the table.

Forbes contributor David Kiley writes that Ford’s promise was likely an attempt to curry favor with Trump, because like other automakers, it would be hurt badly if Trump follows through on a plan to impose a 35% tariff on vehicles imported from Mexico.

But here’s the bigger picture: after a long stretch of growth, the U.S. auto market is maturing. Ford’s plan to shift production, hatched back in 2015 as part of a union contract, isn’t necessary any more because auto sales are slowing down. [UPDATE: The UAW confirmed this in a letter to plant workers today. "The company's plan has been to balance out the current model of the Lincoln MKC to allow for additional capacity for Escape. The company has since reevaluated that plan based on changing business conditions."]

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