Wednesday, January 4, 2017

The decryption eco. When Ford gives way to the threat to Trump and cancel an investment in Mexico – Franceinfo

assembly line of Ford at Dearborn, in Michigan, in 2014.
assembly line of Ford at Dearborn, in Michigan, in 2014. (BILL PUGLIANO / GETTY IMAGES NORTH AMERICA)

The car manufacturer Ford announced on Tuesday January 3, the cancellation of a project to build a plant in Mexico. And if the mêthode Trump to repatriate jobs to the United States was working ?

This is a coup de theatre that has surprised all the observers in the United States : the day Donald Trump had started a little like the previous ones, by a series of tweet avengers, one of whom was targeted, wickedly, not Ford, but his first competitor General Motors : “Manufacture in the United States, or pay taxes !”, had urged the president-elect.

Donald Trump complained about the fact that the manufacturer assembles into effect, thousands of vehicles in its factories in mexico before returning to the United States, without paying any fee, under a free trade agreement that Trump, just never ceases to denounce.

And a few hours later, it is Ford, which announced a 180-degree turn : the company, which had scheduled the opening of a new factory in Mexico, announced at the time of its cancellation and a new investment of $ 700 million in the United States. And the CEO had no shame in explaining his reversal : “It is a vote of confidence in favour of president-elect and announced policies”. Hear : tax cuts promised by the candidate for Trump.

Trump takes his first hit of as much as up here, either the president-elect had gone to the wrong target, or it was assigned to rescue jobs that to him were nothing, as decided well before the presidential election. With Ford, and especially the declaration of its CEO, the doubt is not allowed, without knowing, of course, what are the rewards real Ford could have negotiated and obtained with the team to Trump.

Everything is possible in this case, because it is ultra-sensitive. First, because it is the motor, the queen of american industries, and still more because the widespread destruction of industrial jobs in the last twenty years is one of the major causes of the great malaise in american, and especially of the middle class.

The automotive industry employs nearly one million us employees, but this is half of that in the year 2000. And several american States, especially in the south, have never returned really. And when Trump target Mexico, it speaks very concretely to his constituents : Mexico is becoming one of the leading automobile manufacturers in the world, its production of vehicles has doubled over the last five years, notably because of a labor cost extremely attractive.

other us companies could repatriate their production to the United States. Especially if Trump makes good on its promise to reduce very considerably to the corporate income tax. But I don’t think there is one overall movement. First, because the companies have localized more often their production closer to their market and therefore their customers.

And then, for a reason much deeper, which is what economists call the stretch of the value chain. Take the iPhone, for example, the flagship product of Apple, which is also one of the prime targets of Donald Trump : the iPhone is assembled in China, but the components in the iPhone are produced by more than 600 sub-contractors in almost 30 countries.

so It is just a industry ecosystem is very sophisticated, it is simply not possible to deconstruct it without ruining the business model of Apple. And what applies to the iPhone, is now worth for a lot of other products. This is why the policy of the stroke of the chin, or tweet avenger of Donald Trump will not be able to produce miracles all morning.

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