Last week, president-elect Donald Trump took credit via Twitter for preventing a Ford plant from moving to Mexico.
It was unclear whether Trump understood that the plant, in Louisville, KY, makes only a small number of Lincoln MKC SUVs and that the bulk of its output is the Ford Escape (the vehicles share a platform).
In any case, Ford then said that it had considered moving MKC production to Mexico so that the Louisville plant could build more Escapes, a hot-selling compact crossover SUV that was originally designed in Europe.
The carmaker acknowledged the plan had changed and that MKC production would remain in Louisville.
But here’s the thing: the move wasn’t being contemplated until 2019, when the current Ford contract with the United Auto Workers union expires.
And even if Ford had gone forward with the MKC plan, there would have been no loss of jobs at the factory.
The UAW nonetheless was concerned. This is from Bloomberg’s Keith Naughton:
Ford didn’t inform the union of its long-term plans for the MKC before [Trump’s] tweets went out Thursday night, [a UAW source said]. That’s what UAW Vice President Jimmy Settles, who oversees Ford contract negotiations, and other union leaders were planning to discuss with the company today, he said. Settles and Ford manufacturing chief Bruce Hettle sent a letter to Louisville plant workers Friday promising to meet with them “in the coming days” to discuss the change in plans on the MKC.
But here the thing, even if Ford and the UAW weren’t in communication about this potential change, it’s possible that there still would be no UAW job losses in Louisville because the same workers could simply build the Escape instead of the MKC.
Connecting the blurry dots
Ford Chairman Bill Ford had been trying to get Trump to lay off his criticism of the company’s decision to move some small-car production to Mexico — again, with no UAW job losses in the US, as that production capacity would be needed to build new trucks and SUVS. (Ford wasn’t succeeding, according to reports.)
A plausible explanation is that Ford and Trump worked out a way for Trump to “save” jobs in Kentucky, by keeping modest MKC production (2,000 vehicles per month, versus 30,000 Escapes), abandoning a plan that wasn’t even going to go into effect until late in Trump’s first term.
Trump then created a tempest in a teapot by inaccurately tweeting that the entire Louisville plant was a Lincoln factory and that it wasn’t being relocated. I’m not declaring that this is what actually happened, just connecting the blurry dots.
There was no way Ford was going to move a plant that’s been in operation since 1955, that has been running flat-out to satisfy Escape and MKC demand, and that Ford invested $600 million in to retool back in 2010-2011.
That, unfortunately, was the message that got out, due largely to Trump’s lack of knowledge about how the auto industry operates.
Bear in mind that the change to Lincoln production wasn’t even going to occur for three years. Effectively, Ford jettisoned something it was thinking about doing. But by 2019, the auto market could be different. It’s running at record sales levels now in the US, and it’s a safe bet that even in a downturn, compact SUV sales will hold up. But who knows?
This is the problem with taking credit for a future decision that’s contingent on factors that have nothing to do with the present auto market.