Ford plant turns 'cemetery' as Trump wrenches Mexican autos

Fri Jan 6, 2017 6:23pm EST
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By Christine Murray

SAN LUIS POTOSI, Mexico (Reuters) - Ford Motor Co's (F.N: Quote) abrupt move to scrap a planned $1.6 billion car plant in central Mexico has spooked a network of suppliers who bet on a growing customer base and dramatized the risk that Donald Trump's agenda poses to the country's broader economy.

Many auto parts makers had started to expand in anticipation of Ford's plant in the state of San Luis Potosi, where industry is "easily 70 percent" dependent on the auto sector, said Julian Eaves, managing director of Preferred Compounding de Mexico, a U.S.-owned maker of rubber compounds operating here.

"It's going to have a huge impact on the local community," said Eaves.

The loss to the economy, Eaves calculates, could run into the hundreds of millions of dollars, and maybe even into the billions, over the next five years, as manufacturing, contracting and indirect jobs all fall short of plans. Officials say they are still analyzing the economic impact of the Ford decision.

The hemorrhaging may be just the beginning of Mexico's pain from Trump's vows to shake up trade and bring manufacturing jobs back north when he takes office on Jan. 20.

Ford ascribed its move to a decline in North American demand for small cars like the ones it planned to make in San Luis Potosi. But Trump had been lambasting Ford for its Mexico operations, months before he was elected president in November.

Trump upped the ante on Thursday, threatening to slap a "border tax" on Japanese automaker Toyota Motor Corp (7203.T: Quote) for cars it sells to the United States from a new plant in Mexico, fueling fears of an all-out offensive by his government on Mexican industry.

Mexico's government on Friday "categorically" rejected any attempt to use threats to influence investment decisions in Mexico, saying it wanted to boost the competitiveness of North America. It did not mention Trump or Toyota in its brief statement.   Continued...

A billboard welcoming Ford Motor Co is seen at an industrial park in San Luis Potosi, Mexico, January 4, 2017.  REUTERS/Christine Murray