During a discussion call with analysts Thursday morning, Ford Motor Company Chief Financial Officer Bob Shanks was asked how President-elect Donald Trump’s trade policies competence impact a automaker’s decisions on investing in Mexico or in a United States.
Shanks pronounced that he couldn’t assume on trade. He pivoted, instead, to Trump’s skeleton to cut taxes and spend some-more on infrastructure, observant they could “build a stronger, some-more vibrant, flourishing economy and yield an sourroundings where it creates mercantile clarity to build behind adult prolongation jobs here.”
Less than 11 hours later, Trump was bragging on Twitter that he helped stop Ford from relocating an whole bureau from Kentucky to Mexico.
Just got a call from my crony Bill Ford, Chairman of Ford, who suggested me that he will be gripping a Lincoln plant in Kentucky – no Mexico
— Donald J. Trump (@realDonaldTrump) November 18, 2016
I worked tough with Bill Ford to keep a Lincoln plant in Kentucky. we due it to a good State of Kentucky for their certainty in me!
— Donald J. Trump (@realDonaldTrump) November 18, 2016
The tweets were exaggerated: Ford’s agreement with a United Auto Workers prevents it from shutting down a bureau in question, a Louisville Assembly Plant, or from laying off workers there though enchanting serve talks with a union. The association simplified that it had merely motionless not to pierce prolongation of a singular vehicle, a Lincoln MKC, out of Kentucky.
At a same time, a association pronounced Friday that the coming Trump presidency did give it an inducement to keep Lincoln MKC in Kentucky. “We are speedy a mercantile policies he will pursue will assistance urge U.S. competitiveness,” Ford mouthpiece Christin Baker said, “and make it probable to keep prolongation of this car here in a U.S.”
The events shabby a flurry of difficulty on amicable media that lasted by Friday, and they underscored dual fast-emerging realities for U.S. business in a entrance Trump era. It appears that vast companies such as Ford could, during slightest to some degree, be set to deposit some-more domestically if Trump and Congress cut a taxes. It also appears that Trump will seize opportunities to explain credit for those investments, and to expel them as victories even if they outcome in no new U.S. jobs.
In a box of Ford in Louisville, “No one unequivocally suspicion that plant would close,” pronounced Bernard Swiecki, a comparison automotive researcher during a Center for Automotive Research in Michigan, who marks North American automakers’ investment decisions. “These moves are not during all same to saving a plant. That was never underneath care by anyone.”
What was famous publicly before Thursday’s developments was that Ford had already announced skeleton to pierce prolongation of a Lincoln MKC out of Louisville. Its agreement with a UAW called for it to make adult that mislaid prolongation — and safeguard no jobs would be mislaid in Louisville — by producing some-more Ford Escapes, a other car fabricated in a plant. The Escape is a distant some-more renouned model: Ford has sold more than 258,000 of them this year by October, compared with only underneath 21,000 MKCs.
The agreement does not contend where a MKC prolongation would go. Ford officials pronounced late Thursday that they had dictated to pierce it to Mexico. Union officials pronounced Friday that a association had never indicated that to them. Reports final year suggested a plant in Chicago competence collect adult a MKC production.
Ford did announce skeleton to pierce a opposite line of prolongation — tiny cars, including a Ford Focus — from Michigan to Mexico. It pronounced it would ramp adult other prolongation in Michigan to safeguard no workers mislaid their jobs from a move. Trump criticized that preference regularly on a debate trail, though a association validated this week that it is going brazen with that move.
So because did Ford cancel a comparatively modest, formerly unannounced devise to pierce Lincoln prolongation to Mexico, while progressing a larger-scale devise to pierce small-car prolongation there?
Privately on Friday, Ford officials suggested that their preference to keep Lincoln prolongation in Louisville was shabby in partial by a odds that Trump will pointer a vast cut in corporate income taxation rates and pierce to scale behind fuel-economy standards released underneath President Obama, that automakers have called onerous. Those policies would impact a financial calculus a association uses when determining that cars to furnish and where to furnish them.
Swiecki suggested another factor: a automobile industry’s softening sales growth. Sales were down in Oct for all of a Big Three American automakers. Ford is on lane to sell fewer vehicles this year than it did in 2015, a direct rebate that could meant there was no need to pierce a MKC prolongation to capacitate a plant to shake out some-more Escapes.
A corner letter to Louisville plant workers from UAW and Ford officials on Friday seemed to spirit during that.
“The company’s devise has been to change out a stream indication of a Lincoln MKC to concede for additional ability for a Escape,” it read. “The association has given reevaluated that devise formed on changing business conditions.” The minute pronounced a company’s chairman, Bill Ford, had oral with Trump on Thursday and “let him know of a change in plans.”
Some automotive writers suggested that with a move, Ford officials were charity Trump concessions in hopes of dissuading him from following by with a debate threat to levy tariffs of adult to 45 percent on imports from countries such as Mexico and China. In his call with analysts, Shanks, a association arch financial officer, suggested a association does not know how severely to take those threats.
“I don’t wish to speculate” on a impacts of Trump’s trade policies, Shanks said. “I only don’t know, we don’t know, nothing of us know.”
“So,” he continued, “I only keep entrance behind to a fact that it’s transparent that during slightest from a debate positions that Mr. Trump took that they are focused on growth, they are focused on bringing prolongation jobs behind to a U.S., they are focused on building a stronger, some-more rival infrastructure, that we consider that’s good for a country, as well.”