On September 14, Ford Motor Company made the announcement to the media that the company will be moving all of its small car manufacturing to Mexico as of 2018 or 2019.
This follows the announcement by Fiat Chrysler earlier this year that it would cease manufacturing all vehicles in the United States by the end of 2016, leaving just General Motors as the sole carmaker that will still make the majority of its automobiles in the U.S.
How long will it be before Ford decides to move the rest of its operations south of the border as well? How long will it be before General Motors decides to follow Ford’s lead?
In a continuation of the trend of large manufacturing companies moving their plants outside the country, this latest announcement by Ford is just another blow to the American economy precipitated by high union labor wages, unrealistic health care costs and lack of barriers to exporting jobs to foreign shores.
One can trace back much of the beginnings of this trend to the signing of the North American Free Trade Agreement (NAFTA) by ex-President Bill Clinton, who sold the country a bill of goods when he claimed that the nation’s economy would grow via greater exports and that net manufacturing jobs would be added to company payrolls in order to support these new sales.
But rather than the country’s industrial economy growing, it has shrunk as more than one-third of the nation’s manufacturing jobs have been lost since NAFTA was signed.
The result has been a “giant sucking sound” — as famously described by former presidential candidate Ross Perot in 1992 — to the ears of blue-collar workers, who saw many of their companies outsource labor to China, Mexico or a host of other third-world countries, if not close their U.S. operations completely.
Free-trade agreements such as NAFTA are designed to instigate a “race to the bottom” between different competing nations as the states vie to see which can provide the cheapest labor, the weakest manufacturing quality-control standards and the least-costly working conditions for the poor souls charged with producing the goods covered by the agreements.
Even as NAFTA has been judged to have been a disaster for the U.S., three new free-trade agreements — the Transpacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TISA) — have been drawn up and are headed to Congress and the president for ratification.
These new agreements have been described as “NAFTA on steroids” by seasoned political observers, and at least the first one (the TPP) is set to possibly be passed by Congress during the “lame-duck” session this Fall and signed into law by President Obama before he leaves office.
This is after Obama rammed through “fast-track authority” for the TPP to be approved by Congress with minimal debate and no opportunities for amendments as typical legislation has; there will be a simple “Yes” or “No” vote on it with only 51 votes needed to ratify it in the Senate rather than the two-thirds majority that is typically required for trade treaties.
All of this is in spite of tremendous voter opposition and even vocal objection to the agreements by both GOP presidential nominee Donald Trump and Democratic nominee Hillary Clinton.
Clinton only started to actively oppose the agreements in 2015 after a huge public outcry. She actually helped to craft the TPP during her tenure as Secretary of State and referred to the pact as a “gold standard” as recently as 2013.
Despite Clinton archival Bernie Sanders’ valiant efforts, the Democratic Party did not include opposition to any of the agreements in the party’s official platform finalized at the party’s national convention in July, leaving many people to speculate that Clinton may be open to “compromises” on passing the agreements if she wins the presidential race in November.
To candidate Trump, the aforementioned free-trade agreements are the enemy and he details how they will lead to more job layoffs like the large scale one just announced by Ford Motor. At a recent speech in Flint, Michigan, Trump declared, “These deals we make, folks, it’s almost like we want to take it away from our country and let other countries make fortunes. And you know what? All they do is laugh at us, disrespect us.”
When Henry Ford started his car company in 1903, he revolutionized American industry by paying his workers double what were then standard wages and priced his product affordably for the average American consumer.
To Ford, it was important that his workers be able to afford the product they were making. “The owner, the employees, and the buying public are all one and the same,” Ford stated. “Unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise, it limits the number of its customers. One’s own employees ought to be one’s own best customers.”
But the Ford of today has different priorities. Even though the firm reported a $2 billion profit for the second quarter of this year, the company sees potential for even greater profits by shipping jobs to Mexico.
Trump is highly opposed to the move. “It used to be cars were made in Flint, and you couldn’t drink the water in Mexico. Now, the cars are made in Mexico, and you can’t drink the water in Flint! Oh, I hate to say it, but it’s true,” Trump joked.
“We shouldn’t allow it to happen. [Ford] will make their cars, they’ll employ thousands of people, not from this country and they’ll sell their car across the border. When we send our jobs out of Michigan, we’re also sending our tax base.”
In addition to the company opening plants in Mexico, the American auto giant is being joined by competitors Volkswagen, Toyota, Mazda, Nissan, Hyundai, and Honda in building new operations across our southern border.
These moves, in addition to the threat of automated driverless vehicles causing the loss of millions of driving-related jobs such as taxi drivers, package deliverers and long-distance truckers, have the potential to create a drastic “double-whammy” effect on the automotive-related portion of the nation’s economy.
It’s hard to see where all the unemployed workers would go, as many of these jobs are skilled blue-collar roles that have no clear transition path to any other industry. (Perhaps some of the drivers could wind up controlling drone delivery aircraft for companies such as Amazon?)
While it may be too late to deter Ford’s plans, it might be possible to eliminate their cost-effectiveness by passing a disincentive to moving their factories south.
Trump is convinced there are options. “If you think you’re going to make cars and you’re … going to sell them through our border like we’re stupid people – not going to happen that way,” he vowed. “We’re going to charge you a 35-percent tax on every car that’s made outside the United States.”
Needless to say, in Flint, that was music to the crowd’s ears.
