Ford Motor Co.’s ongoing war of words with Republican Presidential candidate Donald Trump continued today after the businessman-turned-politician suggested the automaker was looking to get rid of all of its U.S. manufacturing employees.
Trump who has repeatedly threated to slap a 35% tariff on any Ford products built and shipped from Mexico to the United States for sale, told a Detroit-area television station that the automaker was looking to get out of the U.S.
“Basically when they make their car, and they think they’re going to get away with this, and they fire all of their employees in the United States; they move to Mexico,” Trump told Fox News Detroit.
“When that car comes back across the border into our country that now comes in free, we’re going to charge them a 35% tax. And you know what’s going to happen? They’re never going to leave.”
(Ford moving all small car production to Mexico. For more, Click Here.)
Ford was quick to respond. Spokeswoman Christin Baker told the Detroit News in an email: “Ford has been in the United States for more than 100 years. Our home is here. We will be here forever.”
The Dearborn, Michigan-based automaker repeatedly said that the move of the Focus and C-Max small cars to Mexico would be offset by the introduction of new vehicles into that Michigan plant, including a new Ford Ranger midsize pickup as well as potentially the Bronco sport-ute, which hasn’t been confirmed.
Since 2011, Ford has invested $12 billion in U.S. plants and created 28,000 U.S. jobs. Trade and legal analysts said there is no clear mechanism that would allow a president to take such steps. And Trump’s critics questioned why the candidate focused on Ford and not the numerous other automakers moving to Mexico.
Ford previously said it would invest $1.6 billion in its Mexican operations. It is not clear if — barring some new roadblocks – that figure will now grow.
(Click Here for more about the impact of a Trump or Clinton presidency.)
Mexico offers a number of advantages for automakers trying to cut production costs on traditionally low-profit small cars. That country’s modest labor rates are a key factor. But Mexico also offers the opportunity to boost exports. It has negotiated more free trade agreements than any other country but Israel.
Ford is by no means the only automaker employing this production strategy. ”It’s something happening generally. It makes sense to build your higher profit models in your higher-cost plants,” said Stephanie Brinley, a senior analyst with IHS Automotive.
Fiat Chrysler CEO Sergio Marchionne recently announced that the maker will end production of all passenger cars in the U.S. The maker is currently negotiating a new contract with Canadian auto workers and it may yet lay out similar plans North of the border. FCA is looking to drop many smaller models entirely, notably its compact Dodge Dart and Chrysler 200 sedans.
(To see more about Ford plowing $1.6 billion into its Mexico plant, Click Here.)
General Motors is also rethinking its small car strategy for the U.S. and foreign-owned makers are also looking at options, especially as they boost their own production presence in Mexico.
I think Mr. Trump (should he become president), will need to use a little stick and carrot in equal measure. Make the companies WANT to produce here. Lighten up on the regulations, taxation, and red tape – find out WHY Ford, Chrysler, and GM are so hell-bent on moving to Mexico and fix it.
After all, we’ve solved harder problems as a nation, that is, when we WANT to. There’s big political power in insuring people remain jobless and reliant on the government.
Perhaps he could begin by asking *himself* why he produces none of his own clothing line in the U.S. and, while attacking Ford, has never expressed any plan to bring production back to the U.S.?
Paul E.
“find out WHY Ford, Chrysler, and GM are so hell-bent on moving to Mexico and fix it”
It’s real simple – cheap labor. The same reason almost nothing you can buy here is made here anymore. “American” manufacturers and other companies that require even skilled labor want to send all their work overseas to low wage third world countries. The management at those companies don’t give a crap about America or their fellow countrymen, they just care about their own personal wealth.
As far as Trump is concerned, he may talk about keeping jobs here to appeal to low information voters, but it’s all lies. Not that Hillary is much better – she’s got a long track record of supporting “free trade”.
Labor costs are not the major reason for manufacturers leaving the US. It is the crippling tax structure that scoops layer after layer of taxes on every item that we buy. For example, the Ford that you buy today has labor costs, of course, but it also has the employer portion of wage taxes included. Additionally, the wage tax for EVERY component that Ford buys is added to the price of that Ford car. It is estimated that approximately 22% of the price of anything made in the US is simply an embedded tax of one type or another. Replacing our present income tax with a national consumption tax would eliminate the 22% embedded tax totally! Of course, the national consumption tax, which has been proposed at 23%, would bring the price of the product up to the same as under the present system. The BIG difference, however, is that you would now be paying for your purchase with post-tax dollars. Also, if you choose to purchase used items, there is no tax at all!
Think of what a national consumption tax (proposed as H.R. 25 and titled The Fair Tax)would do for manufacturing in this country. No manufacturer would be paying any corporate tax, wage tax, medicare tax, etc. You as the employee would pay no wage tax either!! Your take home pay would be the full amount of your paycheck. No longer would you have a “gross” and “net” pay!! Under this system, the US would instantly become the low cost manufacturing location in the world. And, with our wealth of skilled laborers, no region of the world would be able to touch us with regards to quality.
The Fair Tax is the salvation of the US economy. Until it is implemented, we will continue to lose manufacturing jobs, and, there is not a lot the President or Congress can do to stop it. Let’s say Trump is successful in slapping a 35% tariff on cars manufactured outside of the US. Could you afford a Ford? Likely not! Ford would simply focus on making their money in the international market. The same thing would happen to a lot of other goods. They would become too expensive for US consumers to purchase. Before you ask, simply imposing a minimum wage of $18/hr would do nothing. Who would hire you??
Do the country a favor and get educated, properly (NOT just by listening to someone’s opinion), on The Fair Tax!!!