MEXICO CITY — For a second time this year, Ford Motor Company decided to withdraw its investments in Mexico, a country where the automotive corporation has been present for more than 90 years.
Arizona’s neighboring state of Sonora will not produce Ford’s Focus model as originally planned, and Ford’s new strategy might affect this side of the border, as well.
First came Ford’s cancellation of a plant in San Luis Potosí in January; a measure applauded by president Donald Trump.
“Ford said last week that it will expand to Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford / Fiat C!,” reads the tweet from President Trump in January.
And now, the auto company decided to kill its plans to build Focus cars in Hermosillo, Sonora. However, Ford stated their Focus cars will be imported from China in 2019.
This is the first big move from Jim Hackett, who started last month as Ford’s CEO. In a public statement, Ford says their decision to withdraw operations in Mexico will save American jobs and $1 billion in investment costs.
But for some analysts, it will hit the economy of Mexico and the U.S. as both countries are co-dependent on trade and supply chain, particularly in the automotive industry.
“They (Ford) affect everything across the region; everything is integrated: sometimes you have certain products of a car that can cross borders like seven times,” explained Sergio Rodríguez, a senior director in Mexico at Fitch Ratings, a global financial corporation. “It’s nothing particular to what happens on a single location or a single country.”
Rodríguez says the decision makes sense for Ford, since China already produces the Focus, saving money for them. In addition, the U.S. consumers prefer bigger cars than the Focus, which could also explain why their plants in the United States will produce more robust vehicles, like the Bronco and Ranger.
The cancellation of the plant in San Luis Potosí and of the production in Hermosillo will not only affect the demand of labor from Ford Mexico, but also from those businesses in Mexico, Canada and the United States that are linked to their production.
“There are certain jobs that are going to be lost, like the ones from suppliers who come around the factories: they create additional jobs.” Rodríguez said.
The expert from Fitch also explained that the ties in the North American region are very complex and solid in the automotive industry, but the dynamics might change after the renegotiation of the North American Free Trade Agreement.
“From a broader sense, and a longer term, we will have to see how NAFTA is renegotiated, because the auto industry is a very integrated industry, in the case of Canada, Mexico and the U.S.,” he said.