Posted on 09/18/2016 4:20:31 PM PDT by 2ndDivisionVet
Ford Motor Co. is the classic example of an all-American company, but now they are better representing what ails the American economy, as they are being forced overseas. As Ford begins plans to build a $1.6 billion auto assembly plant in Mexico for small car production, the company continues to experience the pressure of globalization crushing their American business dreams.
Ford was a classic Michigan company, but as Detroit News reported Michael Martinez reports, "It will employ 2,800 at the new Mexican plant by 2020."
It is no surprise Ford has to modify their building model in order to compete, most classic American companies do — GM and Fiat Chrysler have outsourced to Mexico for truck production, for example — and Ford could risk closing their entire operation if they did not cut costs. The Small Business Chronicle writer Michael Roennevig found that extremely high corporate taxes, high labor costs, and excessive regulation force companies to move overseas.
It is not Ford's fault; but it is Washington's fault.
With a corporate tax rate of over 30 percent and Obama's environmental, labor and other regulations that increase the cost of running a factory in the United States as well as stifling innovation, companies such as Ford must utilize the tools given to them in agreements such as the North American Free Trade Agreement (NAFTA) which incentivize moving factories and jobs across the border or overseas.
Even the Huffington Post's Lori Wallach wrote in Jan. 2014 that on NAFTA's 20-year anniversary it represented "a staggering $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada and the related loss of 1 million net U.S. jobs."
As once iconic companies resembling the American dream, Ford, moves overseas, President Barack Obama is considering another international free trade agreement which will force even more Americans out of work, the Trans Pacific Partnership (TPP).
An agreement, mind you, that Ford opposes. Moving jobs to Mexico must make executives at the company sick to their stomachs.
While TPP supporters hail the differences between this agreement and NAFTA, the TPP misses one critical element of contention which causes immense harm to the U.S., the TPP offers no protection against currency manipulation.
This practice, heavily employed by Asian countries interested in signing the TPP is found to have been a driving force for job loss and reduced gross domestic product. A study conducted by the Economic Policy Institute in March 2016 found that "currency-manipulation-fueled trade deficits have reduced U.S. gross domestic product, eliminated millions of U.S. jobs, driven down U.S. wages, and propelled the outsourcing of U.S. jobs to currency manipulators. In 2015, the U.S. deficit with TPP countries translated into 2 million U.S. jobs lost, more than half (1.1 million) of which were in manufacturing."
Today, Ford is moving small car production to Mexico and attempting to maintain some U.S. based production, with the TPP in place even more production will eventually be forced overseas. Companies may not be able to compete by producing in America. It's that simple.
In Michigan, which holds 16 votes in the electoral college, the thousands of people losing their jobs are aware of this reality and have already proven they are voting based on it. NBC exit polls from the Michigan primary showed that when asked overall how trade with other countries effected job creation 57 percent believed it took jobs out of the U.S.
This correlates with 57 percent of Democrats and 55 percent of Republicans who believed trade with other countries takes away U.S. jobs. Those people backed Bernie Sanders and Donald Trump overwhelmingly, as both were adamant fighters against the TPP and NAFTA. In the meantime, Ted Cruz and Hillary Clinton supported NAFTA.
Now Ford is proving once again to Michiganders that trade does take away jobs, as they are now going to be unemployed, leaving them with only one other option — voting for candidates who understand that high corporate taxes, and increased manufacturing costs due to heavy regulation harm American manufacturers trying to compete in the world economy. If Michigan voters, who overwhelmingly have a negative outlook on economic conditions and consider it one of the most important issues currently facing the country, vote in the same fashion as they did in the primary, Michigan might easily be a red state on election day.
Clinton, who has flip flopped on both TPP and NAFTA, has sparked distrust with voters on her stance on the issue. Now she says she's against TPP, but can she be believed? In Michigan this could make all the difference for disgruntled former Ford employees losing their jobs to low wage Mexican workers.
Even before Ford's announcement on Sept. 14, a Free Press-WXYZ-TV poll conducted Sept. 10 through Sept. 13 found Trump was already within 3 points of Clinton in the Great Lakes State.
Ford was meant to be a business representing the American dream and American innovation, unfortunately, big government policies and bad trade deals have stolen that from the company. Now Ford's decision becomes a symbol of U.S. economic decline. The next president will decide whether that changes or continues down the economic path the people of Michigan fear.
I don't think so, just excessive taxes forcing low wages and more.
The key here is that they're moving the production of the Ford Focus in particular to Mexico, because that's their compact car model. What's happened is that fuel efficiency and safety standards have added so much to the cost of a car that Ford can't sell the Focus at a competitive price -- and by "competitive" I don't mean competitive with other automakers, I mean competitive with other Ford models.
When you take a $16,000-$20,000 car and add all of the mandated features to it, it becomes a $20,000-$25,000 car. As a result, many customers who would have been in the market for a compact car like the Focus end up paying a few thousand dollars more for a mid-sized Fusion. The end result is that Ford can't sell enough units of the Focus to keep their average fleet efficiency above the level mandated by the EPA, unless they're willing to sell them at a loss.
Ford is moving the Focus production to Mexico because it's the only way they can make them dirt-cheap enough to set the pricing at the compact car level here in the U.S.
Go figure.
OSHA, EPA, EEOC, FTA, DOT, NTSB, DOE, IRS, SEC, and I am just starting. Then replicate these petty tyrants at the state level. Now let’s layer on the free industrialized world’s most oppressive tax scheme and lawsuit happy legal system. The only wonder is why anybody makes anything here.
If you have never owned or ran a substantial business then you have no idea.
Do not blame Ford, Mexico, or China. If we had a modicum of free enterprise and a rational tax and regulatory regime the US would dominate the world and have jobs enough for all willing workers.
Yup. Mexican labor isn’t a great thing. American tech rep’s don’t like traveling there, safety issues. International manufacturing dealings add complexity. Hopefully your conjecture is on target.
I know Jim Rob thinks highly of Mark Levin, but I think he has shown himself to be a tool.
Exactly.
I’m union, and pull into memberships meetings with my Trump bumper sticker proudly in front of the door.
Voted Republican my entire life. Last GOP vote this time...unless Trump wins. Otherwise, I’m retiring and going Gault.
I thought highly of Mark for almost 20 years, then he stated to insult my integrity and intelligence, and he has not stopped it yet. Now I hear he is having Glenn Beck on his show now as well.
“Yup. Mexican labor isn’t a great thing. American tech rep’s don’t like traveling there, safety issues. International manufacturing dealings add complexity.”
I agree. International travel sounds exotic and a lot of fun, but no doubt it gets old fast, even for execs. Not to mention having to bribe officials (and face US jail time if caught), and just the disruption in life.
When manufacturing started leaving here, it was simply because our system (i.e., government, with help from the unions) no longer supported competitive manufacturing.
Preach it, FRiend.
There are a couple of posters who haunt these threads who just love all those nanny state agencies.
They loooove them so very very much that they want the USA to put up big tariffs to protect us from all those evil foreign counties who aren't lucky enough to have caring, meticulous, ever-watchful government bureacracies such as those we are blessed with here in the good old USA.
I am surprised none of them have shown up here yet.
You want the union to grow?
I don’t think Ford realizes Trump has a very long memory and he’s NOT going to forget this kind of crap...
DUH!
It would take tremendous resources to do it, but, given the resources, there is no reason such a venture could not be successful. The business models are there. One such is Subaru, in Indiana, who can barely keep up with their own success.
Then if we could get the freakin' gov't less in the way, such success could be doubled or tripled in short order.
Subaru sells crate engines, even entire drivetrains. I’m aware of several specialty vehicle companies that use them.
The Sube flat four is an excellent engine, springboard off of that and cost of development would be considerably lower.
Move to manufacturing drivetrains after the vehicle is established and selling.
It does seem like most of the primary opponents had little interest in job woes of the typical American. But can the typical American figure all of this out?
Go figure.”
Yeah, I’ve noticed that auto price inflation isnt, for lack of a better term, linear. What cars cost is a reflection of meddling by people who hate them and the freedom they represent.
Sitting on the world’s largest deposits of carbon energy, abundant freshwater, mostly great climate zones, huge deposits of minerals, two oceans, and surrounded by two friendly countries.
And we need protection from foreign manufacturer’s?
Glad to hear from someone who values freedom.
In effect, a policy of massive tariffs on imports is nothing more than a subsidy for all of those nanny-state agencies.
Those are good points. However...
I recall very well the last round of increased Federal fuel efficiency and safety standards. Some of my car buddies (enthusiasts who have made “automotive” their vocation in one way or another: some are engineers, all are very knowledgeable regarding the “tech”, and are all quite successful people) and I were discussing the then proposed requirements. I asked, basically, “Given these standards, how on earth are the “Big Three” going to be able to make affordable, reliable cars that an average person can afford? Is the “tech” there?” The answers were basically “can’t be done” and “no”. (This is not to say that the “tech” is not impressive — the fuel efficiency some fairly hefty vehicles get, these days, is almost amazing, given their size. But, even that comes with reliability and other compromises aside from the $$ costs. Some compromises are non-tech, too: The roof of our Ford Explorer is so thin it’s scary. And it’s an “’08”.)
Anyway, at the time, the auto mfgr’s went along with the new requirements with barely a squawk. I can almost see why the players like Subaru, Toyota, etc., would go along, as their competitive advantage would increase. But why could not Ford, for example, take 5% of the huge advertising budget that they use to oversaturate the market, and explain to consumers that the new standards would force them to move production of some models out of the US? It’s not like Ford execs are too stupid to realize it...
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