Ford plant in Mexico turns into a 'cemetery'

The loss to the economy, could run into the hundreds of millions of dollars

Ford Motor’s 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 dramatised 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 per cent” dependent on the auto sector, said Julian Eaves, managing director of Preferred Compounding de Mexico, a US-owned maker of rubber compounds operating here.

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 analysing the economic impact of the Ford decision.

The haemorrhaging 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 January 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 for cars it sells to the United States from a new plant in Mexico, fuelling 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.

In a matter of days, Ford’s retreat has turned the factory site into a barren plain bereft of its economic promise.

“It now looks like a cemetery,” said Fernando Rosales, 28, a hydraulic hoses contractor preparing to abandon the site. “(There is) only death here, we are all leaving.” 

Not far from the doomed Ford site, other major players from the global automotive industry are in the midst of multi-million dollar investments, including General Motors, which Trump has also repeatedly berated for investing in Mexico.

German carmaker BMW is assembling a $1 billion plant, and a few miles from the Ford site, Goodyear Tire & Rubber is busy building a $550 million tire facility.