Finance

Mexico faces tough Trump era after Ford scraps plant

Mexico faces tough Trump era after Ford scraps plant June 27, 2018Leave a comment
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MEXICO CITY (Mexico): Mexico received a potential taste of life under Donald Trump’s incoming presidency after Ford abruptly canceled intentions to create a new factory in the united kingdom.

The US automaker’s decision was widely interpreted in Mexico due to Trump’s repeated criticism of your US$1.6 billion project inside northern state of San Luis Potosi.

“Obviously it’s not good news for many people,” Economy Minister Ildefonso Guajardo told local radio on Tuesday.

While Ford took note a stop by requirement for small vehicles that would have already been built within the plant, Guajardo said the provider had also been influenced “by its particular situation” in relation to Trump.

The president-elect, who succeeds Obama on January 20, thanked Ford for cancelling the work and creating 700 new jobs in the country instead.

“Case the beginning – a lot more to check out,” Trump tweeted.

Trump has lambasted US businesses that ship jobs to Mexico for its low wages and threatened to impose a 35% import tariff with them.

The Republican billionaire in addition vowed to renegotiate its northern border American Free Trade Agreement (NAFTA) with Mexico and Canada, or withdraw from the pact.

Trump’s priority is to “fulfill his election promise never to allow jobs to exit the nation,” said Juan Francisco Torres?Landa, corporate lawyer at international law firm Hogan Lovells.

Raymundo Tenorio,?director of the finance program along at the Monterrey Institute of Technology, said Ford’s decision could be an instance of the protectionist era that Mexico faces under Trump.

“The Republican government and Donald Trump would like to negotiate almost any (tax) incentives to make sure that companies live in the us,” Tenorio said.

To lead bilateral talks while using the new US administration, President Enrique Pena Nieto brought his former finance minister Luis Videgaray back in his government, naming him foreign minister on Wednesday.

Videgaray had resigned in disgrace in September after it was actually revealed that he has orchestrated Trump’s much-criticized pre-election choosing Pena Nieto in Mexico City.

After taking his new post, Videgaray told foreign ministry officials, without naming a country, that “task is enormous, the threats are there, nevertheless the opportunities and our strengths will also be enormous.”

Decision ‘hurts’ Mexico

For Mexico, Ford’s decision meant losing 2,800 direct jobs in San Luis Potosi, in which the plant was designed to begin operations in 2018.

Instead, Ford, containing produced cars in Mexico since 1925, invested US$700 million covering the next 4 years to be expanded its Flat Rock Assembly Plant in Michigan to produce electric and self-driving vehicles.

The Ford Focus that was being made in San Luis Potosi might be made in a existing plant while in the northwestern Mexican city of Hermosillo.

Ford’s move includes that Mexico is losing new tax revenue while a number of auto-part firms are losing business in San Luis Potosi, Tenorio said, adding that 75 percent of the firms come from Asia, Europe and the Us.

“Ford’s decision hurts Mexico, and also American consumers as well as its shareholders considering that the company will miss competitiveness,” former president Felipe Calderon wrote on Twitter.

Calderon asserted that Ford, Automobile and Chrysler were “almost bankrupt” in the 2009 crisis but “their investments in Mexico saved them.”

Before Ford made its announcement, Trump took GM tasks, threatening to impose import tariffs about the company’s Mexican-made Chevy Cruze models.

GM responded the fact that majority of its Cruze cars bought in united states are available in Ohio, with simply a % imported with a plant across the southern border.

Mexico ‘ready’ for dialogue

Guajardo downplayed concerns that other automakers may follow Ford’s lead, saying the company’s case was isolated.

But the economy minister reiterated Mexico’s willingness to stay with all the Trump administration and Canada to “modernize” NAFTA.

“We have been ready to begin dialogue immediately,” he explained.

Torres Landa said he did not see “a devastating scenario” for Mexico because “the fundamental decisions of efficiency and competitiveness remain present, independently of the Mr. Trump says.”

-AFP

 

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