Ford Motor Co. announced on Tuesday that it would build a new car plant in Mexico. The assembly plant will create more than 2,800 jobs outside of the United States by 2020.
Ford is currently the United States' second-biggest automaker. The company will invest $1.6 billion for the construction of Ford's car plant in San Luis Potosi State, Mexico. Production at the new Mexico plant is set to start in 2018.
The recent announcement added to the growing trend of carmakers increasing their production in Mexico due to favorable trade laws and lower wages. In 2015, Mexico produced approximately 3.4 million cars. About 80 percent of these were exported to the United States and several countries around the world.
Criticisms
Ford's announcement drew criticisms from Republican nomination front-runner Donald J. Trump because of its aggressive expansion outside the country, especially in Mexico. Trump called the move "an absolute disgrace."
"These ridiculous, job crushing transactions will not happen when I am president," said Trump. In his campaign trail, the Republican presidential candidate repeatedly criticized Ford's recent move and insinuated that when he is president, he will not allow Ford to move jobs outside of the U.S.
Business Is Business
The movement was not an unexpected one. In 2015, Ford announced that they will cease production of its C-Max hybrid and Focus sedan at its Wayne assembly plant in Michigan in 2018 but did not specify where the cars will be assembled moving forward. But Ford did, however, mention that they will replace the hybrids and sedans with other car models in the Wayne assembly plant.
According to Mark Fields, Ford's chief executive, that since the last recession, the company had added 25,000 jobs in the country along with a $10 billion investment. As a company, Ford plans to grow in China, Mexico and other countries.
"At the end of the day we are a multinational company, and we will do what's best for the business," said Fields during the New York International Auto Show last month.
Ford said moving its small cars production in Mexico will increase profitability due to lower wages. While the United Automobile Workers did not challenge Ford's plans for a new Mexican plant, its president, Dennis Williams, called the move "troubling."
Williams said it's an example of how American carmakers are exploiting the North American Free Trade Agreement between Mexico, United States and Canada. Kia, Toyota, and Volkswagen's Audi luxury division are also opening new car plants in Mexico.
Photo: Mike Mozart | Flickr
