Speaking in Flint, Donald Trump told Michiganders at a church in the stricken city that Ford Motor Co’s decision to move all small-car production to Mexico is “horrible.” “We shouldn’t allow that to happen,” he said. He has slammed the company’s continued investment in Mexico for over a year and said that as president he would pressure the company to reverse the trend. Flint has been the focus of international attention because of bureaucratic snafus and possible criminal activity that cause the local water treatment plant to distribute drinking water contaminated with toxic levels of lead. Trump has in the past referred to the crisis as a “horror show.”
Trump also toured the idle water treatment plant in Flint. He mused at the church, “It used to be that cars were made in Flint and you couldn’t drink the water in Mexico and now the cars are made in Mexico and you can’t drink the water in Flint.”
Citing faltering profits, Ford Motor Co Chief Executive Officer Mark Fields said yesterday. "We will have migrated all of our small-car production to Mexico and out of the United States," over the next two to three years, Fields told an investor conference hosted by the automaker. In the past, Fields has answered Trump’s rebukes by explaining that a globalized company such as Ford is competitive by making rational business decisions. Ford will invest $1.6 billion in Mexico for small-car production to start in 2018.
In 2015, Ford said that production of the Focus and C-Max lines will be shut down at its Wayne, Michigan, plant in 2018. The United Auto Workers Union said then that the company was planning to build the Focus vehicle in Mexico. The shift to Mexico is expected to take place next year before the start of the 2018 model year. The move will also affect Ford’s operations in Europe.
This spring, Ford said that it still plans to build two new vehicles – the new Bronco SUV and the Ranger pickup – at the plant in Michigan beginning in 2018.
Likewise, Fiat Chrysler Automobiles NV said this year that its plants in the U.S. will emphasize the production of trucks and Jeeps over passenger cars. This is expected to be complete by the beginning of 2018.
Other points revealed at the investors’ meeting:
Ford does not anticipate job losses.
In late 2015, the company pledged to invest $9 billion in U.S. plants and create or keep more than 8,500 positions as part of a new four-year contract with the UAW. $4.8 billion of that will go to 11 facilities in Michigan.
Ford will increase electric car production.
Despite tepid sales of electric cars, Ford pledges that $4.5 billion will be spent to develop more than a dozen new electrified models by 2020. CEO Fields is confident about electric vehicles because he is assured that lithium ion battery pack prices are dropping. Ford has said it will introduce a fully autonomous vehicle by 2021, which is later than other manufacturers. Ride-sharing company Uber has already deployed a small fleet of semi-autonomous passenger cars in Pittsburgh. Ford has not decided on partnering with a ride-sharing company. General Motors has invested $500 million for just 9% of Lyft, and Toyota has invested in Uber.
Major acquisitions unlikely.
Little money has been set aside by Ford for large mergers and acquisitions. Hedging his bets, Fields said he is still open to the idea.
Ford will not be renamed: "Ford Mobility Company," even though it remains committed to becoming "a mobility company and an automotive company." Fields vocally told a Bank of America representative, "We are NOT changing our name."
But mobility is profitable.
According to Ford, the automotive industry the world over produce $2.3 trillion in annual revenue while transportation industry represents $5.4 trillion in annual revenue. Ford has earned a profit margin of about 10% or more in North America in recent years. The company believes that its profit margins will exceed 20% in the transportation industry.
Profits are languishing.
For 2017, Ford expects profits to fall south of the $10.2 billion estimated for this year due to spending on emerging mobility opportunities, higher material costs, and unexpected recalls.
The future looks bright.
Even while profits in the short term may decline, Ford is much more fit than it was in recent years. Ford will be able to maintain, despite capital expenditures, $20 billion in cash on hand over the next three years and should be able to weather a recession or sales shortfall.
Ford Motor Co stock dipped in price 24 cents, or 1.9%, to close at $12.14 per share in recent days. Moreover, it has dropped 13.8% since the start of the year.