Why Ford abandoned its Mexico plant

Billboard welcoming Ford Motor Co is seen at an industrial park in San Luis Potosi, Mexico. File picture: Christine Murray/Reuters

Billboard welcoming Ford Motor Co is seen at an industrial park in San Luis Potosi, Mexico. File picture: Christine Murray/Reuters

Published Jan 7, 2017

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Washington - Ford chief executive Mark Fields said

Tuesday the automaker was ditching its plans to open a factory in Mexico and

instead expanding a Michigan plant, creating 700 more local jobs.

The next wave of workers in Flat Rock will build mostly

self-driving and electric cars, including a hybrid Mustang. Unlike

manufacturing roles of decades past, though, the jobs will probably require

computer literacy and more than a high school degree.

"The era of the electric vehicle is dawning,"

Fields told his employees this week, "and we at Ford plan to be a leader

in this exciting future."

The new employment opportunities - the tickets to the

middle class - will not look like the old ones. Economists say auto

manufacturing at Ford and beyond will become increasingly automated, resulting

in fewer jobs for more highly skilled workers.

Ford's move became political after Fields expressed

confidence in the business climate under President-elect Donald Trump, and

Trump on Twitter took credit for the company's decision. Both men invoked the

importance of protecting American jobs.

Analysts, though, say Ford's decision stemmed more from

its long-term goals than the new administration or devotion to US workers. The

company aims to invest $4.5 billion in electric vehicles by 2020. (The company

would not comment on the specifics of the 700 new positions.)

"We expect a big change in the next decade on not

only the growing affordability," Fields said, "but also the consumer

acceptance of electrified vehicles."

The Ford engineers, tasked with creating these models,

work in Dearborn, Michigan - 20 miles from the Flat Rock assembly plant. Moving

production to Mexico would have made their jobs harder, said Brett Smith, an

auto analyst at the Centre for Automotive Research in Ann Arbor.

"Keeping a new technology near the engineers is an

important thing, at least in the first generation," he said. "That

gives them a lot more control to monitor a system."

Ford's vision for the updated Michigan facility,

meanwhile, meshes with broader industry trends, he said.

"Each iteration of a facility becomes less like old

school manufacturing and more high-tech," Smith said. "That will

ultimately mean fewer jobs. The people will have to keep learning throughout

their careers. It won't be like the old days, when you do the same thing for 40

years."

It's also easier for companies such as Ford to find

skilled workers in the United States, said Mark Muro, who studies economic

policy at the Brookings Institution, a Washington think tank.

"The Mexico platform is essentially a lower cost,

just-good-enough workforce," he said. "It is not a place where

there's a lot of innovation or new product development." (Ford will

continue to make gasoline-powered Focus vehicles at its Hermosillo, Mexico,

plant.)

Read also:  Ford bins $1.6bn Mexico plant

Fields was blunt about why Ford changed its mind, cancelling

a $1.6 billion factory slated for San Luis Potosi. "The reason that we are

not building the new plant," he said, "the primary reason, is just

demand has gone down for small cars."

The president-elect has argued that trade policy has

quashed American livelihoods, encouraging businesses to seek cheaper labour in

other countries. He has criticised Ford, General Motors and Carrier on Twitter

for shuttling work south of the border.

A study last year from the Centre for Business and

Economic Research at Ball State University, a school in the manufacturing

heartland, tells a different story. Co-author Michael Hicks, an economics

professor, found that advances in technology caused far more job loss. That's

because automation has enabled factories to produce more goods with fewer people.

WASHINGTON POST

 

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