Chided by Trump, Ford scraps Mexico factory, adds Michigan jobs

Tue Jan 3, 2017 5:26pm EST
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By Bernie Woodall and David Shepardson

FLAT ROCK, Mich./WASHINGTON (Reuters) - Ford Motor Co (F.N: Quote) on Tuesday scrapped a planned Mexican car factory and added 700 jobs in Michigan following criticism by Donald Trump, as the U.S. president-elect turned his attention toward rival General Motors Co (GM.N: Quote) with the threat of a "big border tax" over compact cars made in Mexico.

Ford CEO Mark Fields called the move "a vote of confidence" in Trump, but primarily a response to a decline in North American demand for small cars like those that would have been made at the Mexican plant. He said Ford would have made the same decision even if Trump had not been elected.

Ford will cancel plans unveiled in April to spend $1.6 billion to build the new plant in San Luis Potosi, Mexico, a project Trump urged the automaker to abandon and called an "absolute disgrace" during the election campaign.

The No. 2 U.S. automaker also said it would invest $700 million to expand the Flat Rock, Michigan factory and would make new electric, hybrid and autonomous vehicles there.

Trump's efforts to browbeat the U.S. car industry show he may go further than other modern presidents to try to influence corporate decisions, especially those related to trade and investment.

In a Twitter post hours before Ford's announcement, Trump wrote, "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!" GM, the largest U.S. automaker, said making some of the Cruze cars in the plant in Coahuila, Mexico was part of its strategy to serve global customers, not sell those vehicles in the United States.

Trump's GM tweet was his latest broadside aimed at an American company over jobs, imports and costs even before he takes office on Jan. 20.

Mexico's government said it regrets Ford's decision and has ensured that the company will reimburse San Luis Potosi state for any costs associated with the investment.   Continued...

Ford Motor Co. Flat Rock Assembly Plant is seen in Flat Rock, Michigan, U.S. January 3, 2017. REUTERS/Rebecca Cook