Lots of confusion about this last night on social media.
Trump fan Matt Drudge is hyping the news this way:
Did Bill Ford speak to Trump yesterday? Yep, sure did, according to the company. He told Trump that production of the Lincoln MKC would in fact remain in Kentucky after having been slated to move to Mexco. Does that mean the plant was going to close, though? No, and it never was. Here’s a story that ran shortly after the new CBA was signed last November:
Ford Motor Co. intends to move production of the Lincoln MKC out of the Louisville Assembly Plant, but labor leaders insisted that the loss of the model won’t cut employment levels…
“Whatever happens in Louisville it will not lose employment. …They cannot make enough Escapes,” UAW Vice President Jimmy Settles, the chief negotiator for the Ford contract, told the Detroit Free Press in an interview.
Top UAW officials meeting Monday morning in Detroit approved the proposed contract and made the 28-page document public. Next the deal will face a ratification vote by nearly 53,000 Ford employees, including about 8,800 at LAP and the Kentucky Truck Plant in Louisville.
Moving Lincoln production to Mexico was never about moving jobs. In fact, the collective bargaining agreement between Ford and the union would likely prevent the company from closing any U.S. plants before 2019 at the earliest. The company’s plan for Kentucky, it seems, is merely to shift production of the low-selling MKC to Mexico while ramping up production of the Escape in Louisville. No closed plant, no jobs lost, just a different vehicle model to build. Their Michigan plant was, and maybe still is, set for the same kind of shift. As of last month, small-car production was headed to Mexico so that the plant in Wayne, MI could focus on the Ford Ranger pick-up and Bronco SUV. Now, per Trump, Ford’s reversing course: The Kentucky plant will continue to manufacture MKCs alongside Escapes. It’s possible, I guess, that they’ll expand hiring in Kentucky so that they can meet their original target for the Escape and maintain production of the MKC, but I haven’t read anything to that effect. It looks like, at least for now, they’re simply going to allocate existing resources between the two models in Louisville and make fewer Escapes than they initially intended. Less business for Mexico, but no more for the U.S.
An unanswered question at the moment is whether Ford changed its mind about moving the MKC to Mexico this week, as a reaction to Trump’s nationalist victory, or whether the decision was made before that and Bill Ford merely told Trump about it this week. Maybe we’ll find out more about that today. It’s no secret, though, that Ford execs have been annoyed at Trump for awhile for, they say, distorting their hiring practices in the U.S. The UAW contract struck last November requires the company to invest $9 billion in American plants, more than half of which goes to Michigan, and to create or retain more than 8,500 American jobs. Roughly $1.3 billion of that money went to Kentucky for the truck plant in Louisville. Ford has also been known to move jobs from Mexico to the U.S.: The company used to build its F-650 and F-750 south of the border but shifted production to a plant outside Cleveland last year. Even some Ford auto workers who otherwise like Trump think he’s giving the company a bad rap. Here’s Bill Ford himself talking about all of this last month. On the one hand, says Ford, he’s spoken to Trump about all of this and found him to be a receptive listener who’s up on the facts. On the other hand, it’s “infuriating” that Trump continues to circle back to Ford as an exemplar of evil corporations sending “American jobs” abroad. Maybe that explains why Ford was eager to tell Trump about the MKC staying put in Kentucky. Even if that won’t mean any extra jobs for U.S. workers, it’s something that might stick in Trump’s mind the next time he’s grasping for examples of companies that are shifting production. Ford isn’t — in this particular case. Although, as noted, it is with respect to small-car production generally.
Update: Ed emails with an excellent point about why Ford might want to move production of small models to Mexico. It’s not a simple matter of saving on labor; it’s because Mexico’s international trade agreements are freer than ours in some respects, making cars manufactured there more competitive cost-wise abroad. Something for our incoming protectionist president to bear in mind.
Update: Ah, here’s the answer to the question of when exactly Ford decided to shift production of the MKC back to the Kentucky plant. Sounds like it was indeed a PR move capitalizing on Trump’s election:
Mr. Ford’s call represented a genuine change in direction for the auto maker, not just a symbolic gesture, according to people close to the executive. The auto maker has been in contact with Mr. Trump’s transition team over the past 10 days, and executives see the Lincoln move as a relatively painless but authentic way to give Mr. Trump a victory even before he moves into the White House.
They’re still planning to move small-car production to Mexico, but keeping the Lincoln in Kentucky for now is a low-cost goodwill gesture to Trump’s fans. (They’re not planning to add any American jobs to handle continued production of the MKC but demand going forward will determine that.) Maybe this will encourage Trump to lay off them rhetorically for the foreseeable future.