As Trump vows to bring jobs back to the U.S., automakers face uncertainty

Back in April, Ford Motor Company announced it was moving its small car production from Michigan to Mexico, drawing strong criticism from then-republican presidential candidate (and now president elect) Donald J. Trump. Throughout his presidential campaign, Trump engaged in a good deal of verbal sparring with the Dearborn-based automaker, pointing to Ford’s plans to build a multi-billion dollar plant across the border as indicative of a larger trend in the U.S. manufacturing jobs sector. Trump has even proposed a 35 percent tax on all autos built in Mexico and shipped to the U.S. And now that Trump is President, automakers may need to rethink their international production strategies.

“I mean, the way our country is run, if it doesn’t happen to be me that wins, you know what’s going to happen? They’re going to build a plant and illegals are going to drive those cars right over the border… And they’ll probably end up stealing the cars,” Trump is quoted in a report from Fortune, published this past January.

Trump has repeatedly pledged to bring more jobs back to U.S. auto manufacturing, and offers pointed criticism of NAFTA, a trade agreement between Canada, the U.S., and Mexico that went into effect in the mid ‘90s.

In response to Trump’s denunciation, Ford countered with a well-executed social media blitz, highlighting how the automaker has invested billions in U.S. plants in the past five years, and created upwards of 28,000 new American jobs. Ford says more investment and more jobs are still on the way.

Ford maintains it will indeed move production of the Focus to Mexico, as well as shift some engine and transmission production over the border. With margins on small cars like the Focus shrinking, the move should help to bolster profits. The move would also include billions in investment for new Mexican production facilities, and is expected to create roughly 3,800 new jobs in Mexico.

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Why it matters

According to a recent report from Reuters, “Mexico now accounts for 20 percent of all vehicle production in North America and has attracted more than $24 billion in investment from the industry since 2010,” citing the Center for Automotive Research in Ann Arbor, Michigan.

However, Trump’s solution might not be the silver bullet U.S. workers are looking for. “His trade policies could add $5,000 or more to the price of a small car from Mexico,” says Charles Chesbrough, senior economist and executive director of strategy and research at the Original Equipment Suppliers Association, a trade group that represents auto suppliers, as reported in a recent post from Fortune.

Nevertheless, now that Trump is confirmed to be the next President of the United States, Ford says it’ll work towards reaching some kind of accord with his administration.

“We agree with Mr. Trump that it is really important to unite the country, and we look forward to working together to support economic growth and jobs,” said Ford spokeswoman Christin Baker in a statement.

Like other major U.S. automakers, including General Motors and Chrysler, Ford has made massive investments into production facilities in Mexico, and a Trump presidency casts doubt into plans for future production expansion. As a result, stock values for those automakers producing cars and auto parts in Mexico took a hit Wednesday morning. The value of the peso also dropped dramatically in the wake of the election.

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