Ford to pay Mexico back for expenses towards scrapped factory construction, following Trump comments

Record ID: 162972

  • Title: Ford to pay Mexico back for expenses towards scrapped factory construction, following Trump comments
  • Date: 4th January 2017
  • Summary: CUAUTITLAN IZCALLI, MEXICO (FILE) (REUTERS) FORD LOGO IN ASSEMBLY LINE FORD FIESTA MODEL ASSEMBLED IN FACTORY VARIOUS OF NEWLY ASSEMBLED CARS AT FACTORY
  • Embargoed: 19th January 2017 06:25
  • Keywords: Donald Trump Mexico Ford
  • Location: SAN LUIS POTOSÍ, MEXICO CITY, AND CUAUTITLAN IZCALLI, MEXICO
  • City: SAN LUIS POTOSÍ, MEXICO CITY, AND CUAUTITLAN IZCALLI, MEXICO
  • Country: Mexico
  • Topics: Government/Politics,International Trade
  • Reuters ID: LVA0045XJ2HJ7
  • Aspect Ratio: 16:9
  • Story Text: Mexican authorities said on Tuesday (January 3) that all public expenses paid towards the planned construction of a Ford factory would be refunded by the company after construction plans were scrapped following criticism by U.S. president-elect, Donald Trump.
    Ford Motor Co scrapped a planned Mexican car factory on Tuesday and added 700 jobs in Michigan, as Trump turned his attention towards rival General Motors Co with the threat of a "big border tax" over compact cars made in Mexico.
    Ford will cancel plans unveiled in April to spend $1.6 billion to build the new plant in San Luis Potosi, Mexico, a project Trump urged the automaker to abandon and called an "absolute disgrace" during the election campaign.
    Residents in the city lamented the decision.
    "We always do the work that they want to do, so I want to see what will happen if he builds the factory in the United States, and see the Americans wanting to do the jobs that we were going to do, and of course it affects us a lot too because a lot of people who do not have work were going to have the opportunity, and now they no longer have that opportunity," said San Luis Potosi resident, Ana Rodriguez.
    "It seems to me to be a bad policy of his (Donald Trump) because he is intervening in the globalization of companies, he wants to takes these companies to the United States and this is going to affect Mexico in this way," added local, Guillermo Rostro.
    Since winning the Nov. 8 election, Trump has targeted a wide range of American companies also including United Technologies Inc, Boeing Co and Lockheed Martin Corp. Trump also has touted decisions by companies to keep some production in the United States, including United's Carrier unit in Indiana.
    Trump previously vowed to hit companies that shift production from America to other countries with a 35 percent tax on their exports into the United States. He also has denounced the North American Free Trade Agreement between the United States, Mexico and Canada.
    Mexico's government said it regrets Ford's decision and has ensured that the company will reimburse San Luis Potosi state for any costs associated with the investment.
    "The state government and Ford Motor Company will proceed in accordance with the terms of the agreement in order to apply the agreed rules for early termination, which imply, in this case, a total refund by the company for all the expenses paid by the state government on this project to date. The State Secretary of Finance and Economic Development will proceed to carry out the quantification of the resources used and the corresponding actions in mutual accordance with Ford Motor Company," said San Luis Potosi State Governor, Juan Manuel Carreras.
    "Without a doubt, we would have loved the investment to have come to fruition. We understand that the market and the business plans of companies vary according to different circumstances," Carreras added.
    Ford CEO Mark Fields called the move "a vote of confidence" in Trump, but primarily a response to a decline in North American demand for small cars like those that would have been made at the Mexican plant. He said Ford would have made the same decision even if Trump had not been elected.
    The No. 2 U.S. automaker also said it would invest $700 million to expand the Flat Rock, Michigan factory and would make new electric, hybrid and autonomous vehicles there.
    Ford said it still will shift production from Michigan of its Focus compact car to an existing plant in Hermosillo, Mexico. Fields said he expects Michigan to give incentives for Ford's investment in Flat Rock.
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