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Under pressure on U.S. jobs, Ford tries new gambit with Trump

Published 11/18/2016, 07:17 PM
© Reuters. Executive Chairman of Ford Motor Co., Bill Ford Jr. during anniversary of 150th birthday of Henry Ford, in Michigan
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By David Shepardson

WASHINGTON (Reuters) - Ford Motor Co (N:F), one of Donald Trump's prime corporate targets on the campaign trail, offered the President-elect a chance to claim a victory late on Thursday by informing him it would not shift production of a Lincoln sport utility vehicle to Mexico from Kentucky.

Trump jumped at the chance, claiming in a tweet that he had "worked hard" with Ford Executive Chairman Bill Ford Jr. to keep the plant in Kentucky, even though Ford had never considered moving the whole factory south of the border.

In letting Trump claim a victory, Ford made what appeared to be a calculated, public appeal to the next president in an attempt to soothe concerns about outsourcing jobs and to gain some leverage with the new administration as the automaker pushes for favorable policy changes in Congress.

"Ford is not going to make a decision on a purely political basis," said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research in Michigan.

"They are going to make a decision that makes business sense, economic sense and if it happens to align with political goals, that's great," she said.

The No. 2 automaker in the United States is not the only company in Trump's crosshairs working out how to deal with the new political reality in Washington.

Apple Inc (O:AAPL), criticized by Trump for not building products in the United States, is studying the possibility of moving iPhone production to the United States, Japanese news service Nikkei reported on Thursday.

Apple did not reply to a request for comment on Friday.

JOBS = VOTES

Trump campaigned heavily on bringing jobs to the United States and attacking companies such as Ford that plan to take some production overseas, a message that resonated in the economically ravaged center of the country.

Ford gave Trump plenty of ammunition, confirming in September that all of its remaining small-car production in the United States, at its facility in Wayne, Michigan, would go to lower-cost Mexico by 2019.

Ford Chief Executive Mark Fields said no plants would be closed as a result, and no U.S. jobs would be lost as capacity at the Wayne plant would be taken up by two new models.

The Mexico plans remain in place, despite the fact that Trump vowed on the campaign trail to stop Ford opening a new plant in that country and promised to slap 35 percent tariffs on any Ford vehicles made there.

Ford went further this month, announcing on Election Day a new $195 million investment in India to add 3,000 jobs over the next five years in a technology and business center in Chennai. Ford said this week it would import its Ford EcoSport built in India to the United States. Trump has not made any public comment on that plan.

BOTH CLAIM VICTORY

On Thursday, Ford said it had been reviewing where to build the Lincoln MKC, just one vehicle built at the Louisville assembly plant, but had decided to keep it in Kentucky.

As such, nothing changed, but letting Trump announce the decision gave him the opportunity to claim he saved U.S. jobs and cast Ford as a patriotic manufacturer.

"Both sides will claim a certain level of victory because nobody wants a significant negative impact on the industry," said Dave Cole, chairman emeritus of the Center for Automotive Research.

It was unclear how many, if any, jobs were actually saved by the decision. Ford decided last year to move MKC production by 2019, on the assumption that production of the Ford Escape, a similar vehicle made in the same plant, would grow. But recently Escape demand has slumped, which may have prompted Ford to reconsider.

According to Cole, Ford's olive branch to Trump was a clear indication that it needs help from the next administration as it faces a host of issues from fuel economy standards and the rise of autonomous vehicles to trade and currency.

Cole said Trump, who boasts about his dealmaking skills, may choose to focus on bargaining with companies he has targeted - even if only for small concessions - rather than pursue more punitive measures such as tariffs, which would take time to implement and potentially damage the economy.

Ford nodded to those wider issues in a statement on Friday, saying it was encouraged that Trump's economic policies "will help improve U.S. competitiveness."

© Reuters. Executive Chairman of Ford Motor Co., Bill Ford Jr. during anniversary of 150th birthday of Henry Ford, in Michigan

Ford, like other global U.S. corporations, agrees with key aspects of Trump's economic plans. It has called for U.S. tax reform and raised concerns about the costs of federal regulations. Ford also shares Trump's concerns about currency manipulation.

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