MEXICO CITY (TheBlaze/AP) — Ford Motor Co.’s cancellation of plans to build a $1.6 billion auto manufacturing plant in San Luis Potosi has sounded alarms across Mexico.
Even as the country is being rocked by rowdy nationwide protests against a Jan. 1 gasoline price hike, the Ford news led the front pages of Mexico’s most influential newspapers Wednesday — and they tied the development directly to President-elect Donald Trump.
“Trump leaves Mexico without 3,600 jobs,” read the headline on El Universal. “Ford’s braking jolts the peso,” Reforma said, referring to the Mexican currency’s nearly 1 percent slump following the news.
— El Universal (@El_Universal_Mx) January 5, 2017
The newspaper cited both Ford and Carrier, two of the companies that have announced in recent weeks plans to keep jobs in the U.S.
Ford CEO Mark Fields announced Tuesday the company was canceling plans to move up to 700 jobs to Mexico and keep more of its resources in the U.S. Fields said the about-face was not the result of direct dealings with Trump but rather a “vote of confidence” in the Republican’s “pro-growth policies.”
In addition to the 700 Ford jobs, Carrier announced in late-November plans to keep hundreds more jobs at a factory in Indiana rather than move them to Mexico, which was the company’s original plan. The reversal came after Trump struck a deal with Carrier executives, part of which gave the company up to $7 million in state tax breaks.
Critics of the deal, including longtime Trump supporter and onetime vice presidential candidate Alaska Gov. Sarah Palin, have blasted the deal as “crony capitalism.” They say the U.S. government should not pick winners and losers when it comes to which companies receive tax breaks, even if those tax cuts result in the companies investing in more jobs for Americans.
Between Ford and Carrier, the number of jobs kept in the U.S. totals 1,500. The source of the other 2,100 jobs cited by El Universal is unclear.
Mexicans have been nervous about Trump’s tough rhetoric toward their country, including disparaging remarks about immigrants who enter the U.S. illegally and vows to wall off the border and renegotiate the North American Free Trade Agreement, upsetting ties with what is by far Mexico’s largest trading partner.
Two weeks before the inauguration, the scuttling of the planned Ford factory and Trump’s pressure on General Motors to keep jobs in the U.S. or face a “border tax” should be a “much-needed wake-up call,” Mexico analyst Alejandro Hope said.
It shows “how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently,” Hope said. “They claimed that at the end of the day economic interests would prevail over political messaging. That’s clearly not the case.”
It also implicitly criticized the Mexican government’s response to the incoming administration.
“Mexico loses thousands of jobs with no word on a clear strategy for confronting the next U.S. government which has presented itself as protectionist and, especially, anti-Mexican,” the paper wrote. “Trump will try to recover as many U.S. companies that have set up in Mexico as possible. He will try to make them return at whatever cost, through threats or using public resources.”
“Ford’s decision is indicative of what awaits the economies of both countries,” the daily La Jornada said. “For ours a severe decrease in investment from our neighboring country, and for the U.S. a notable increase in their production costs.”
Hope said more decisions like Ford’s are likely to come. And while the loss of a single planned plant probably does not fundamentally change the U.S.-Mexico economic relationship, “it certainly shows that the idea that the status quo was entrenched was false.”
“This should put us on notice that when he says that he wants to renegotiate NAFTA, he means it,” Hope said.