Ford Motor Company announced on Tuesday that they are cancelling plans to build a $1.6 billion assembly plant in Mexico. Instead, the company says it will invest some $700 million to expand a plant in Flat Rock, Michigan. Small car production will still move south of the border, but it will take place at an existing factory.
Of course president-elect Trump immediately took to Twitter to claim credit for Ford's decision.
A spokesman for the company told Reuters that Ford was encouraged by Trump's plans to relax regulations and lower taxes, but there had been no negotiations with the president-elect regarding the decision. In other words, Trump had nothing to do with it.
Ford issued a press release to explain what is happening. That statement reads in part,
Ford today announced it is cancelling plans for the new plant in San Luis Potosi, Mexico. It also announced that, to improve company profitability and ensure the financial as well as commercial success of this vehicle, the next-generation Focus will be built at an existing plant in Hermosillo, Mexico. This will make way for two new iconic products at Michigan Assembly Plant in Wayne, Michigan, where Focus is manufactured today – safeguarding approximately 3,500 U.S. jobs.
Ford CEO Mark Fields said the company is encouraged by the "pro-growth policies" of Trump and the GOP Congress. But he later indicated on CNBC that the company's decision is totally based on current market forces in the auto industry.
Trump has threatened companies who move production from the United States with high tariffs when they bring their products to U.S. markets. But that threat doesn't appear to have anything to do with Ford's decision.
Fields explained that the company reconsidered building the new Mexican plant because demand for small cars has decreased in recent years. Focus production will still move south of the border, but it will be done on a smaller scale. The Michigan plant expansion is part of an effort by the automaker to dramatically increase production of electric and self-driving vehicles.
Just like in the Carrier deal, Trump is taking credit as the savior of American jobs. But once again, some jobs are still moving to Mexico; just not as many as would have if Ford had followed through with their original plans.
Trump is a quick read, and it didn't take long for many of the captains of industry to figure out how to deal with him: Say nice things about him and his policies and frame any business moves in a way that allows Trump to claim he was the reason for the decision. Ford just executed that strategy to perfection.
Here's Fields on CNBC catering to Trump's ego: