Does Ford leave for Mexico or not? As the future American president triggers a tweet about the manufacturer’s production in Kentucky.
For weeks now, managers of the American car manufacturer Ford have been concerned about possible new customs duties due to production and job shifts to Mexico, according to Donald Trump. In the election campaign, still as a candidate, Trump had already visited Ford headquarters in Detroit for a crisis talk. But the misunderstandings and moods remain intact. For Ford as well as for the entire car industry, the issue has been of great importance, since Trump is no longer a candidate, but will become the President of the United States in January of next year.
Because Mexico is the seventh largest production country in the world, Mexico is even ahead of France and Spain. One third of the car imports to the United States are from there, but the cars from Mexico are also exported to many other countries. The largest producer is Nissan, followed by Volkswagen and General Motors (GM). How attractive the country is as a production location for the automotive industry is to be seen in a report by the Roland Berger consultants. By 2020, the car companies from Europe, Asia and the United States had already announced a total investment volume of 17 billion dollars.
On Thursday of this week Trump now announced on the short news service Twitter that Ford had canceled the relocation of a factory from the American state of Kentucky to Mexico on his urging.
According to GM, the second-largest American car manufacturer emphasized that it was not about the whole plant, but about the production of a single model, the Lincoln MKC sold in comparatively small numbers. This production will continue in the factory in Kentucky. Trump had already sharply criticized the company’s plans to relocate some of its production to Mexico, and threatened import duties in the event of its election.
However, Ford also maintained its production planning after the election victory, and reiterated repeatedly that the plans did not endanger jobs in the United States. No factories in the home country of Ford should be closed. The production moved to Mexico should be replaced by the production of other models. Trump had not adopted these arguments, however, and claimed Ford wanted to remove jobs as part of his Mexico engagement in the United States. Whether the future president is sticking to his threat of tariffs, despite the fact that the production line in Kentucky remained, remained unclear.
German manufacturers would also be affected by tariffs
However, a toll wall between the United States and Mexico would be a very bad news for the car industry far beyond Ford, and German manufacturers would also be significantly affected by such a step. After all, Daimler, BMW and Audi are investing billions in new factories in Mexico to deliver low-cost cars and low-cost cars, especially to the United States, but also to other countries. “The hope is that there is a gap between the election campaign and the presidency,” says Daimler CEO Dieter Zetsche. The basic difficulty behind all concerns is that Trump is challenging the free trade agreement with Mexico and Canada (Nafta) – and tariffs of 35 percent to protect the domestic industry is a good idea.
Should Trump actually implement these ideas, albeit with the necessary advance in advance, American products manufactured in the respective countries would be considerably more expensive. To what extent this subsequently has a bearing on demand, and later perhaps also on production decisions, is, however, quite open. On the other hand, it is certain that such a step would not necessarily imply an end to the factories in Mexico. Cars could be diverted to other target countries, especially to Asia, in the auto sector this “worst case” can be heard. But nobody would want to experience it.