Is Ford Leaving America?

If you listened to Republican Presidential Nominee Donald Trump at the first Presidential debate it will sound as if Ford and a lot of other companies plan on taking their manufacturing capabilities elsewhere. Trump mentioned:

“So Ford is leaving. You see that, their small car division leaving. Thousands of jobs leaving Michigan, leaving Ohio. They’re all leaving. And we can’t allow it to happen anymore…

But we have to stop our jobs from being stolen from us. We have to stop our companies from leaving the United States and, with it, firing all of their people.”

In another instance where Trump was interviewed by Fox News he mentioned what Ford will do when takes its small car division out of the country. Ford will:

“fire all its employees in the United States”

There’s some truth to what he said. Yes, Ford mentioned back in April 2016 that they’ll be investing $1.6 billion to build a new plant in Mexico, create 2,800 jobs, and shift the production of small cars from the Michigan Assembly Plant in Wayne to the new plant. However, to imply that some or all of the American manufacturing jobs will disappear is an extreme accusation, and Ford quickly took to Twitter to respond:

Ford has more hourly employees and produces more vehicles in the U.S. than any other automaker. pic.twitter.com/k15cqknsvX

— Ford Motor Company (@Ford) September 27, 2016

Ford has maintained that the shift in production won’t result in job losses in the United States. According to CNN Money:

Ford said there will be zero job losses in the U.S. as a result of the new plant in Mexico. The Wayne, Michigan, plant that now builds the Focus and C-Max that will move to Mexico will instead start building other models — probably the new Ford Bronco SUV and Ranger small pickup.

The company has 85,000 U.S. employees, up 28,000, or nearly 50%, in just the last five years. It has 8,800 employees at Mexican plants, and will add 2,800 jobs there when the new $1.6 billion plant opens there in 2018.

During the debate Trump was asked how he would prevent the manufacturing jobs from leaving:

“If you want to go to Mexico… Good luck. But if you think you’re going to make your air conditioners or your cars.. and bring them into our country without a tax, you’re wrong. And once you say you’re going to tax them… we can stop them from leaving. We have to stop them from leaving.”

The tax Trump is referring to is the 35% tax he plans on imposing on Ford when they sell their foreign made cars on U.S. soil. He mentioned in a Fox News interview:

“When that car comes back across the border into our country that now comes in free, we’re gonna charge them a 35% tax. And you know what’s gonna happen, they’re never going to leave,”

This move would quickly make Ford’s cars much more expensive for Americans, making them less competitive against other American car companies that are already making some of their cars in Mexico and Canada. It is also unlikely that a tariff will ever be imposed since: 1) the President require the Congress’ approval to place tariffs on another country, and 2) Imposed tariffs could potentially spark a trade war which would cause other economic problems.

So will Ford leave America? That’s highly unlikely. Ford has a lot vested in the American manufacturing plants, and to close up shop and leave for cheaper manufacturing costs would deal massive damage to the only brand that didn’t take any bailout money from the Troubled Asset Relief Program back in 2009.

(Source: CNN Money & Detroit Free Press)