With Carrier setting the precedent for what future negotiations with the Trump administration may look like, Ford CEO Mark Fields has come forward to layout potential policy changes that would be important to preserving auto jobs in the United States. Not surprisingly, per an interview with Bloomberg, Fields' opening "ask" focused on less restrictive fuel economy standards, new currency-manipulation rules to promote free and fair trade and corporate tax reform.
Ford Motor Co. was a target of Donald Trump’s criticism on the campaign trail for building cars in Mexico, and now that Trump will be president, Ford said it’s willing to work with him to keep jobs in the U.S. -- provided Trump puts the right policies in place, according to the automaker’s chief executive officer.
“We will be very clear in the things we’d like to see,” Mark Fields said in an exclusive interview Friday at Bloomberg offices in Southfield, Michigan.
Among them, according to Fields: currency-manipulation rules to promote free and fair trade, tax reform and safety guidelines for autonomous vehicles.
Fields said that Ford plans to lobby the new president to soften U.S. and state fuel-economy rules. They hurt profits by forcing automakers to build more electric cars and hybrids than are warranted by customer demand, he said.
“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Fields said in the interview. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”
Of course, Ford was a frequent target of Trump's during the 2016 campaigning cycle after they announced plans to move their small car production to a new facility in Mexico. That said, Fields noted that Trump's policies "in terms of his economic policies, whether it’s tax reform or otherwise" have already gone a long way toward influencing Ford's decision to maintain the production of the Lincoln MKC at a plant in Louisville, KY.
After the Nov. 8 election, Trump phoned Executive Chairman Bill Ford to discuss the carmaker’s plan to move manufacture of the Lincoln MKC sport utility vehicle to Mexico from a plant in Louisville, Kentucky, Fields said. The discussion helped convince Ford to keep building the Lincoln in the U.S.
Trump influenced the decision “because of what he’s talking about in terms of his economic policies, whether it’s tax reform or otherwise,” Fields said.
As our readers are certainly aware, North American auto OEMs and their tier 2 suppliers have been in a race to move auto production across borders to low-cost countries (LCCs) for the past couple of decades as soaring wages, pension and OPEB obligations, high taxes and punitive regulations have made production in the U.S. all but impossible.
Of course, the groundwork for the shift of auto production to Mexico was laid with the passage of NAFTA in 1993 by former President Bill Clinton (a fairly inconvenient fact that Hillary probably regrets pretty heavily right now). Since then, Mexico has been a huge beneficiary of automotive plant relocations with offsetting closures coming from the U.S. and Canada. A recent chart from the Wall Street Journal, perfectly illustrates the transition of production capacity to our southern neighbor.
Meanwhile, with wages that are a fraction of those paid in the U.S. and an accommodative regulatory structure, it's no surprise that the U.S. has lost a substantial number of automotive manufacturing jobs to Mexico.
Ford is scheduled to open a new $1.6 billion small-car assembly factory in San Luis Potosí in 2018 and hire 2,800 workers. People familiar with the matter say Ford will produce its Focus there, which is currently built in Michigan.
A contract reviewed by The Wall Street Journal puts factory wages at the facility at about $1.15 to $2.30 per hour, on par with what other auto-assembly plants currently pay in the region. The move to Mexico will yield cost savings of about $1,300 per vehicle, or about $300 million a year, according to manufacturing experts familiar with the Detroit car maker’s finances.
And while Trump continues to engage in meaningful conversations with company CEOs that have already yielded positive results for Midwest manufacturing employees, here is another look back to just a few short months ago to when Obama said it was all impossible (well, impossible absent a "magic wand" anyway). Enjoy.