Analysis

Why is Ford moving to Mexico?

Ford Motor Co. confirmed that it will shift all of its U.S. small-car production to Mexico. Why?

The smartest insight and analysis, from all perspectives, rounded up from around the web:

"American-made small cars are becoming an endangered species for Detroit's Big Three automakers," said Michael Martinez at The Detroit News. After nearly a year of speculation, Ford Motor Co. confirmed last week that it will shift all of its U.S. small-car production to Mexico over the next two to three years. As American consumers shun compact vehicles "in an era of $2-per-gallon gas," a number of automakers, including Fiat Chrysler and General Motors, have decided to move their small-car manufacturing south of the border in order to save money building the low-profit vehicles. Unfortunately for Ford, its announcement came during an election-year melee over trade and globalization. Donald Trump promptly ripped the firm, accusing Ford's executives of planning to "fire all of their [U.S.] employees." It's "an absolute disgrace," Trump said. "We shouldn't allow it to happen."

Except Ford has repeatedly insisted that not one American job will be lost in the move, said Chris Isidore and Poppy Harlow at CNN​. The unionized Michigan factory workers who have been building Ford's small cars will now be put to work manufacturing other Ford models, most likely the company's larger, more profitable trucks and SUVs. Nevertheless, "Ford is making Trump's trade argument for him," said Arthur Delaney and Alexander Kaufman at the Huffington Post. Even if U.S. jobs aren't lost right now, the fact that Ford and its fellow automakers hope to take advantage of cheap labor in Mexico plays perfectly into Trump's argument that "many trade deals hurt American workers." The average Mexican autoworker earns the equivalent of $8 to $10 an hour, compared with $29 for top-tier autoworkers here. Partly as a result of U.S. companies setting up shop there, "Mexico eclipsed Japan as the No. 2 exporter of cars to the U.S. last year."

Yes, Ford is investing in Mexico, "but not at the expense of the country that birthed the industrial icon and produces most of its profits," said Daniel Howes at The Detroit News. Ford has created 28,000 U.S. jobs and invested $12 billion in its U.S. facilities over the past five years. It also builds more vehicles and employs more hourly workers in the U.S. than any other automaker. This is actually a good example of free trade working well for everyone involved, said Jordan Weissmann at Slate. One argument in favor of NAFTA is that it has "allowed the U.S. auto industry to thrive by moving low-margin manufacturing to Mexico, where wages are cheaper, while leaving more profitable work in the U.S." That's exactly what's happening here.

Let's say you want to buy an all-American car, said Nathan Bomey at USA Today. "What does that even mean?" The "most made-in-America car you can buy" right now is actually the Toyota Camry, assembled at plants in Kentucky and Indiana with the most domestically produced parts, according to a Cars.com analysis this year. But the Camry, of course, comes from a Japanese automaker. And of the more than 450 vehicle models sold in the U.S. for the 2016 model year, none was manufactured using parts made only in the U.S. The truth is, "no matter what vehicle you buy, you're supporting the economy of a foreign country."

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