Earlier this week,
Nonetheless, Ford’s construction of a $1.6 billion factory in Mexico is still moving forward. On top of that, the ostensible decision to keep a small fraction of its initially Mexico-bound production in the US is a relatively minor “concession” considering that it never planned on moving in the first place. It merely represents some form of a tactic to work with the Trump administration in terms of reconciling the president-elect’s policy inclinations with Ford’s business necessities.
While some companies make small cars directly within the US, Ford’s margins have increasingly become tight over the years as a result of legacy costs, with its large number of pensioned employees. If Ford does not move its production to low-cost jurisdictions on its lower-margin vehicles, it will be almost impossible for the company to produce the vehicles profitably. The company’s conciliatory tactic – although meaning essentially nothing – is one way to get the ball rolling with respect to productive discussions with the Trump administration.