With his inauguration still weeks away, President-elect Donald Trump continues to rack up victories and win back American jobs.
The Ford auto company has scrapped plans to open a plant in Mexico. Instead, the $700 million that would have gone to construction of the new plant will be invested in the company’s plant in Flat Rock, Michigan. This will result in 700 new jobs for Michigan auto workers.
In an interview with CNN’s Poppy Harlow, Ford CEO Mark Fields stated the investment in Flat Rock represents a “vote of confidence” in the new business environment being ushered in by Mr. Trump. Fields also indicated that the decision to invest in Michigan rather than Mexico was not any sort of special deal, but rather simply a move that made business sense for Ford.
Ford execs believe the future belongs to electric cars, and within 15 years actually outsell gas-powered vehicles. The $700 million investment will be targeted toward the production of electric and self-driving cars. Ford has seven new electric cars are in the works, and plans to introduce them within the next five years.
The decision to kill the plans for a new plan in Mexico represents an interesting change for Ford, a change foreseen by few if any. Trump had kept pressure on the automaker to keep or return jobs to the US during his campaign for the presidency, and had kept up the pressure after the November election.
Trump had warned that, once president, he would place a 35% tariff on Ford cars made in Mexico and sold in America, a pledge he has vowed to take with other manufacturers who ship American jobs outside the country.
The Ford CEO pointed to Trump’s plans to cut corporate taxes and remove regulatory impediments on businesses. He stressed that the company’s decision to invest $700 million at the Flat Rock plant was strictly a business decision, and was unrelated to any pressure Trump had exerted on the company.
The $700 million that will now be invested in Michigan was to have gone to the construction of a new, $1.6 billion plant in Michigan. According to Bernard Swiecki, senior automotive analyst at the Center for Automotive Research: “This does make a heck of a lot of sense for business reasons. Political favor is an advantageous byproduct.”
A great challenge to job creation in the automotive sector will be labor costs that are significantly higher in the United States than in Mexico. An auto worker in the United States makes an average of $28 per hour, while a similar auto worker in Mexico averages $5.50 per hour.
The markets reacted to the news from Ford, with the company’s stock increasing 3% upon Fields’ announcement.
Auto workers are, understandably, jubilant at the Ford announcement. Chris Romano, an auto worker at the Flat Rock plant, told CNN: “It’s great news. Great for our future here, especially the new hires.”
Although not yet President, Trump’s presence has already been felt, with Sprint and Carrier announcing they will create jobs or keep ones that had been earmarked to be moved outside the US.
Many doubters had said that Donald Trump was merely a bag of hot air, that the jobs lost were gone for good. Trump is proving them wrong. Trump will make America great again!