For a year and a half now, Donald Trump has made Ford Motor Co. his automotive punching bag, while General Motors, following the conventional advice for encountering a grizzly bear, tried not to make any sudden movements that might attract his attention.
Both companies have been investing heavily in Mexico, but Trump kept singling out Ford in his attacks, which consisted more of rhetoric to incite the crowds at his rallies than actual facts.
In one day, Ford managed to flip the narrative. Suddenly, Ford has become the American automaker investing in America, while GM is printing up layoff notices that will go out to 2,000 workers in Michigan and Ohio just as Trump is taking office.
Ford, after insisting throughout the presidential campaign that its plans for Mexico were set in stone, has now handed Trump two gift-wrapped victories since the election. First was the reversal of plans to move Lincoln MKC production out of Kentucky. Now it canceled an entire $1.6 billion plant, choosing to spend less than half that amount in Michigan instead.
And hours before announcing that stunning turn of events, Ford scored a victory for itself when Trump tweeted an attack on its archrival. Trump told his millions of followers that GM was importing Mexican-made Chevrolet Cruzes and threatened a “big border tax” if it didn’t start making them in the U.S. instead.
The timing was clearly no coincidence.
Trump aide Kellyanne Conway, appearing on CNBC this morning, said the tweet related to “secret information” that Trump had received.
And the fact that Trump picked on the Cruze was curious. If he simply wanted to attack GM for importing vehicles from Mexico, why not point out that Chevy sold about 80,000 of its Mexican-made Trax crossovers in the U.S. last year?
In contrast, only about 4,500 of the Cruzes sold last year in the U.S. were built in Mexico. GM started importing the Cruze hatchback about five months ago, because demand for it isn’t strong enough to justify installing the tooling for it in Lordstown, Ohio, where the Cruze sedan is produced. The Mexican-built hatches are sold in a number of countries, including the U.S.
Through November, GM had made 319,536 Cruze sedans in Ohio last year. All of the Cruze sedans sold in the U.S. since the nameplate’s 2010 debut have been made in Ohio.
But the Cruze was ripe for an attack because inventories of them have swelled to the point that GM is cutting the third shift in Lordstown on Jan. 23 -- three days after Trump’s inauguration. It’s easy to make the case that GM is up to something nefarious when it’s cutting American jobs at the same time as imports of the car those workers build are increasing.
The truth is that GM can’t just move hatchback production to Ohio at the drop of a hat. With volumes of fewer than 1,000 a month so far, it would make more sense to just stop offering the car than to spend the extra money to build it in Lordstown.
And the fact is, Ford still plans to move production of its Cruze competitor, the Focus, to Mexico in 2018. That hasn’t changed. It’s just going to make the car in an existing plant, alongside the Fusion and Lincoln MKZ, rather than build a new plant for that purpose.
Ford even says it will save money by canceling the San Luis Potosi plant, which was scheduled to open next year. It’s a win for the company as well as for Trump, who gets to claim credit for creating jobs even before he becomes president.
The investment that Ford is making in Michigan, adding 700 jobs here instead of 2,800 in Mexico, is certainly significant. UAW Vice President Jimmy Settles said he cried when told of the gains for his membership.
But the biggest result of Ford’s flip flop is a greater potential for Trump to bully other automakers into similar moves.
