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Ford Fires Back at Mexico Criticism, Citing Boom in US Truck Output

Sept. 19, 2016
CEO Mark Fields said the company is “absolutely not” cutting U.S. jobs to move small-car operations south because the Michigan plant currently building them will manufacture other models.

Ford Motor Co. pushed back against criticism by Republican presidential candidate Donald Trump for moving work to Mexico by highlighting its booming business in big trucks after shifting production to an Ohio factory from south of the border.

The automaker began building F-650s and F-750s--think dump trucks, beer haulers, tow trucks and furniture vans--near Cleveland a year ago after a joint venture in Mexico disbanded in 2014. Through August, their sales have jumped 59% from the same period in 2015, Ford said in a statement Monday.

For Ford, the convoy out of Cleveland shows the benefits of the strategy that Trump is criticizing: shifting production of lower-margin small cars to Mexico, where workers are paid less, while using U.S. factories to build its biggest, high-profit vehicles. Trump last week called Ford “a disgrace” that’s cutting U.S. jobs, a claim rebutted by Chief Executive Officer Mark Fields.

Ford could have sidestepped the flap by confirming it was moving small-car assembly to Mexico when reports emerged more than a year ago, an analyst said.

“They could have avoided this if they had made the official announcement when everybody knew about it,” said Kristin Dziczek, director of industry, labor and economics group at the Center for Automotive Research.

Trump vs. CEO

Trump last week threatened to levy a 35% tariff on Ford’s Mexican-built cars if he’s elected president in November. Fields said the Dearborn, Mich.-based company is “absolutely not” cutting U.S. jobs to move small-car operations south because the Michigan plant currently building them will manufacture other models.

“It’s really unfortunate when politics get in the way of the facts,” Fields said in a Sept. 15 interview on CNN. “We’ve created more than 28,000 jobs in the U.S. in the last five years.”

The jobs issue resonates particularly in industrial states like Michigan and Ohio, Dziczek said. Trump led Hillary Clinton by 5 percentage points in a Bloomberg Politics poll of Ohio released last week. The gap underscores the Democrat’s challenges in critical Rust Belt states after one of the roughest stretches of her campaign.

Avon Lake, Ohio, where the trucks are built, is just west of Cleveland, the state’s second-largest city by population. Ford has sold 10,160 of its F-650 and F-750 trucks this year through August, the highest sales of those models since 1997, the automaker said in its statement.

Truck Profits

The trucks previously had been produced in Mexico in a joint venture with Navistar International Inc. called Blue Diamond Trucking Co. To accommodate the new work, Ford spent $168 million converting its assembly plant in Avon Lake from producing Econoline vans. The automaker now builds full-size Transit vans in Claycomo, Mo. 

Ford derives most of its profit from its F-Series truck line, Morgan Stanley has said. And the largest vehicles in the line generate the biggest return, according to analysts. By going it alone in the big-truck market, Ford no longer has to share profits with Navistar.

After parting with Navistar, Ford redesigned the F-650 and F-750 to offer them in a variety of body styles and with either gasoline or diesel engines. General Motors Co. exited that segment of the truck market following its 2009 government-backed bankruptcy.

“We’re seeing growing interest in the new tractor from beverage and hauling fleets,” Kevin Koester, Ford’s marketing manager for the models, said in a statement. “Towing and rental customers have embraced the gas engine.”

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Licensed content from Bloomberg, copyright 2016.

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