Ford is moving its small car production from the United States to Mexico.
CEO Mark Fields told investors Wednesday the move was designed to simplify and cheapen production.
“We remember when cars were manufactured in Flint, Michigan, and you couldn’t drink the water in Mexico … Now cars are manufactured in Mexico and you can’t drink the water in Flint.”
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“Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States,” Fields announced.
Economic experts say the same U.S. trade policies Donald Trump has criticized for decimating American manufacturing are the culprit behind Ford’s announcement.
“Bill Clinton’s NAFTA guaranteed the wholesale exodus of U.S. automobile manufacturing to Mexico,” said Curtis Ellis, director of the American Jobs Alliance. “Ford’s announcement is just the latest incident in a process which began more than 20 years ago.”
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Economist Alan Tonelson agreed and also pointed to the regulatory burdens faced by U.S. manufacturers.
“Under the present trade policy regime and under the present American environmental quality policy regime, the economics of making small passenger cars in a first-world country like the U.S. are very difficult,” said Tonelson, who blogs on economics and national security at RealityChek.
“It’s quite natural for these auto companies to focus their U.S.-based operations on making larger vehicles where the margins are much greater,” he continued.
Ellis pointed out that it’s not just those in the manufacturing industry who benefit from a strong American manufacturing base. “We remember when cars were manufactured in Flint, Michigan, and you couldn’t drink the water in Mexico,” said Ellis. “Now cars are manufactured in Mexico and you can’t drink the water in Flint.”
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“When we sent our manufacturing overseas, we also sent away the tax base that supported our basic infrastructure,” he noted.
However, were the U.S. to pursue a more aggressive, America-first trade policy, the seemingly never-ending offshoring of jobs could not only be halted — but even reversed, Tonelson noted.
“If we did put into effect the kind of trade policy that Trump has been talking about, under which U.S. companies that move production to a place like Mexico and expect to sell that output back here” are hit with high protective tariffs, “that’s going to be a very powerful incentive to move small car production back here,” Tonelson said.