Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. He operates the blog MISH'S Global Economic Trend Analysis and believes in the Austrian School of economics.
Trump has it out for Mexico, and Germany, and China. So what’s a company to do? Ford provides the answer.
The New York Times reports Ford Chooses China, Not Mexico, to Build Its New Focus
Ford Motor said on Tuesday that it would build its next-generation small car for American consumers in China rather than Mexico, where the automaker canceled plans for a new factory this year.
The company was building a $1.6 billion assembly plant for the next Focus model in Mexico, but it ran into stiff opposition from President Trump and then canceled the project.
Goodbye Mexico, Hello China
Bloomberg reports Ford to Save $1 Billion Building Focus in China Instead of Mexico.
Ford Motor Co. is canceling controversial plans to build the Focus small car in Mexico, saving $1 billion by ending North American production entirely and importing the model mostly from China after next year.
The U.S. automaker will start making the next-generation Focus in China from the second half of 2019, a year after output ends at one of its plants in Michigan. Ford will trim about $500 million in costs by shifting production to China, adding to the $500 million already saved from canceling construction of a small-car factory in Mexico earlier this year.
The company will be testing both consumer appetite for China-built cars and the tolerance of President Donald Trump, who has criticized automakers for importing vehicles from overseas.
“We’ve done a lot of research and consumers care a lot more about the quality and the value than they do about the sourcing location,” Joe Hinrichs, Ford’s president of global operations, said in a conference call with reporters Tuesday. “iPhones are produced in China, for example, and people don’t really talk about it.”
Vote of Confidence
CNN Flashback January 3, 2017: Ford cancels Mexico plant. Will create 700 U.S. jobs in ‘vote of confidence’ in Trump
Ford CEO Mark Fields said the investment is a “vote of confidence” in the pro-business environment being created by Donald Trump. The $700 million investment will go to the Flat Rock, Michigan plant to produce more electric and self-driving cars.
This is a major U-turn for Ford. Trump repeatedly slammed Ford on the campaign trail for shipping U.S. jobs to Mexico (a claim the company said was wrong). The president-elect has kept up the pressure.
Trump tweeted “thank you” to Ford Wednesday and said, “This is just the beginning – much more to follow.”
“Only the Beginning – Much More Will Follow”
Trump’s reaction should be interesting.
It would have been better for the US and Mexico to have the plant in Mexico rather than China.
Stupid things (like this) happen when governments interfere in the free market.
Mike “Mish” Shedlock