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Ford says restrictions at Mexico plants 'not sustainable'

Stock MarketsJul 09, 2020 08:10PM ET
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2/2 © Reuters. The corporate logo of Ford is seen at Brussels Motor Show 2/2

By Anthony Esposito

MEXICO CITY (Reuters) - Ford Motor Co on Thursday said new staffing restrictions imposed on plants producing car parts in the Mexican state of Chihuahua were "not sustainable," the latest sign U.S. automakers are still reeling from coronavirus lockdowns in Mexico.

Mexico is a key part of a wider international supply chain crucial to U.S. carmakers, many of which operate factories across the border in Mexico due to lower labor costs.

Chihuahua, where the state government has limited employee attendance to 50% in plants, is home to a Ford (N:F) engine plant and many auto parts producers.

U.S. ambassador to Mexico Christopher Landau on Thursday said the Dearborn, Michigan-based automaker may have to shut some U.S. car plants as early as next week if they fail to receive Mexico-produced engines.

Kumar Galhotra, president of Ford's Americas and International Markets Group, said the company had "several suppliers" operating under restrictions imposed by Chihuahua state.

"With our U.S. plants running at 100%, that is not sustainable," Galhotra said in an emailed statement.

"While we do not expect any impact to production next week, we are continuing to work with government officials on ways to safely and constructively resume remaining production," he said.

Mexico's federal government has given automakers, mining firms and builders, with activities deemed essential, the green light to restart work, though some states have implemented their own restrictions as the coronavirus pandemic rages on.

Landau said a senior Ford executive told him on Wednesday night about the company's concern over parts produced in Chihuahua state.

"They're saying that they're going to start shutting down factories in the United States as of next week if they don't get that rolling," Landau said, in a talk organized by the Atlantic Council.

Alejandra de la Vega, Chihuahua's minister of innovation and economic development, said she was in "constant contact" with Ford and spoke with a company executive Thursday morning, but did not specify what was discussed.

De la Vega said Chihuahua had created a traffic light system to allow different sectors to gradually reopen from lockdowns, but added it was a "balancing act" to protect both public health and the economy.

In May, when Mexico signaled it would delay the reopening of its factories, Mexican officials said their U.S. counterparts pushed for a speedy return, arguing that U.S. plants on American soil could not operate without them.

(This story corrects to fix typographical error in headline)

Ford says restrictions at Mexico plants 'not sustainable'
 

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Comments (6)
John Macey
John Macey Jul 13, 2020 3:13AM ET
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When it's a matter of US jobs and business profitability versus the health/lives of Mexican workers, the outcome is highly predictable    Money talks!   The poor listen! Seemingly, Americans are not even very concerned about American health/lives. They presumably know that the US has one of the worst records of CORVID infections and deaths (per capita) in the developed world! Undoubtedly questionable Presidential leadership has contributed to this result. Quickly implemented social distancing, quarantining and (probably) wearing masks are essential strategies for dealing with  pandemics. Promoting medically unproven remedies is not. A good, well equipped, universal healthcare system is very helpful in reducing the death rate. Probably,  American prioritisation of their constitutional rights to do whatever they want to do (or not do), over the rights of others and their social responsibilities in a pandemic, has been a significant factor in the poor US outcome. All rather sad!
John Shiels
John Shiels Jul 10, 2020 7:37AM ET
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Cheap labor, less restriction, quality? Another good reason to bring everything home. What’s the holdup Kudlow?
BiG DaDDy CK
BiG DaDDy CK Jul 09, 2020 9:17PM ET
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Engines, ju no nee no stinkin engines!!
William Carnell
William Carnell Jul 09, 2020 8:36PM ET
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All modernized manufacturing operations now rely on basically having zero excess inventory to reduce costs. However, if risk management has not prepared for interruptions in the supply chain, there will be immediate and possibly severe shutdowns.
Nathan rogers
Nathan rogers Jul 09, 2020 8:29PM ET
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this won't affect the f150 as the engines are made elsewhere
Joanna Yin
Joanna Yin Jul 09, 2020 7:47PM ET
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auto supply chain is very fragile. any supplier failure can cause shutdown. question, who is going to pay this time and how long does it last?
 
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