Ford’s new EcoSport model could fuel the biggest debate over automotive trade even as it is set to become the smallest SUV in the Detroit automaker’s line-up.
This is because instead of an assembly line in the United States, the little EcoSport will roll off a Ford assembly line in India.
A company decision that has been frequently cited by President-elect Donald Trump during his campaign, Ford has also made plans to move all of its small passenger car production from its U.S. operations to a new facility in Mexico.
Trump has said that he would take steps to block Ford from importing Mexican-made passenger cars even if it by imposing hefty tariffs. The incoming administration, since the election results, has sent signals that it would look at barrier-inducing tariffs against a variety of countries, possibly including China and not only try to tear up NAFTA and block a trans-Pacific trade deal.
Should this anti-import rhetoric turn into hard policy, Ford is by no means the only automaker that could be impacted. Either operating Mexican production facilities or setting up new plants there are a virtual Who’s-Who of the world’s automakers.
Apaseo el Grande, in the central Mexican state of Guanajuato is the place where Toyota broke ground this week for a new assembly facility. The compact Corolla, the world’s best-selling automobile and routinely one of the best-sellers in the U.S., would be produced at this facility. Nissan’s new factory set up would soon begin turning out some Mercedes-Benz products south of the border as other automakers, including Audi and Kia, have recently gone into production in Mexico.
The Corolla is also built in Blue Springs, Mississippi, as well as at a factory in Canada, which shows that in some cases, these facilities will add to existing operations in other parts of the world. But the new Audi plant will be the world source for the popular Q5 sport-utility vehicle.
In part because of the role critics contend the North American Free Trade Agreement has played in shifting automotive jobs out of the U.S., much of the attention in the current trade debate has focused on Mexico. This has made Mexico has become one of the five largest national manufacturers of automobiles in the world. This has been bolstered by the fact that the country has inked more global trade deals than any other nation in the world apart from the low wages which are a factor.
No sign of pulling back from Mexico is being exhibited by Ford and other carmakers. And in order to try to get the then-candidate to drop what Ford called “infuriating” rhetoric, William Clay Ford Jr., the automaker’s chairman and great-grandson of Henry Ford, even met with candidate Trump. However that did little to take Ford out of the bullseye or to cool the debate. And whether the EcoSport announcement will fan the fires remains to be seen.
“To make this whole thing work, you have to have a relatively free flow of components and vehicles across borders.”
(Adapted from CNBC)