Yes, the automaker is building more small cars in Mexico. Get used to it.
In the first phase of his debate performance last night, before he busted out the tiny invisible accordion, GOP presidential nominee Donald Trump returned to a frequent theme: Attacking the U.S. auto industry for exporting jobs to Mexico. Often, his ire was directed specifically against Ford Motor Company. “Ford is leaving,” Trump said gravely. “You see that, their small car division leaving. Thousands of jobs leaving Michigan, leaving Ohio. They’re all leaving.”
After several concerned citizens took to Twitter to express their dismay to the automaker, Ford spent the evening engaging in some social-media damage control.
Ford has more hourly employees and produces more vehicles in the U.S. than any other automaker. pic.twitter.com/k15cqknsvX— Ford Motor Company (@Ford) September 27, 2016
Unlike some of the Republican candidate’s claims, this one is actually based on a thing that is happening in our shared reality: In mid-September, Ford announced that it would phase out production of its Focus and C-Max compact cars in Michigan and start building the vehicles in a new facility in Mexico. Since the smaller Fiesta is already made south of the border, that means that Ford will no longer have any small cars constructed in its home country. Neither will FCA, the Fiat-owned consortium that your dad still calls Chrysler. Thus, two of the Big Three U.S. automakers won’t make any American-made small cars in the U.S.
But, as Ford’s hard-working social media team found themselves at pains to explain, it also doesn’t mean that thousands of jobs are leaving: The Michigan plant workers who are now making the downmarket Focus and its slow-selling hybrid sibling the C-Max will start making SUVs and pickup trucks, which can be sold for a higher profit. BMW, General Motors, Honda, Kia, Mazda, Nissan, Toyota, and VW/Audi also have Mexican assembly plants churning out their smaller and less-expensive cars, which are popular outside of the U.S. and, thanks those trade agreements that Trump loves to rail against, cheaper to export globally. The industry is indeed investing heavily there—Mexico’s car-making capacity is expected to double between 2010 and 2020. Those cars aren’t exactly pure 100-percent Mexican products, however, because that’s not how the auto industry operates. As an astute report from the the Center for Automotive Research in Ann Arbor observes:
Due to well-integrated North American supply chains, vehicles produced in Mexico may be comprised of up to 40 percent U.S. content. In fact, U.S. exports of parts and components to Mexico more than doubled between 2005 and 2014 to a level of $18.4 billion.
This growing integration of the North American auto industry is one reason why there are more workers on both sides of the border: U.S jobs in the car industry grew 15 percent since 2008. (Mexican jobs jumped almost 40 percent.)
Still, Ford sort of invited this uproar by hemming and hawing about its intentions in Mexico over the last year. And in the longer term, it’s worth remembering that all carmakers are facing radical changes in how, and what, they are building, not just where.
One critical reason small car production is shifting out of the U.S. is because Americans don’t buy them like they used to: Cheap gas and higher resale values on larger vehicles and (particularly) crossovers and SUVs have made those segments far more popular for new car buyers, who tend to be older and suburban-dwelling. Many of the younger urbanites who would once have dutifully signed the paperwork on a new Focus or Honda Civic after graduation have discovered that they don’t need to own a car at all, thanks to Zipcar, Uber, and their disruptive ilk. Ford’s other big announcement in mid-September involved the company’s plan to position itself as a builder of electric, probably autonomous vehicles for a future car-sharing service. Like all carmakers, they see that the slow death of the American-made city car as a profitable segment is already upon us. The only surprise is how many of the rest of us didn’t know it yet.