Ford Motor Co. is the classic example of an all-American company, but now they are better representing what ails the American economy, as they are being forced across the border. As Ford begins plans to build a $1.6 billion auto assembly plant in Mexico for small car production, the company continues to experience the pressure of globalization crushing their American business dreams.
Ford was a classic Michigan company, but as Detroit News reported Michael Martinez reports, “It will employ 2,800 at the new Mexican plant by 2020.”
It is no surprise Ford has to modify their building model in order to compete. Most classic American companies do — GM and Fiat Chrysler have outsourced to Mexico for truck production, for example — and Ford could risk closing their entire operation if they did not cut costs. The Small Business Chronicle writer Michael Roennevig found that extremely high corporate taxes, high labor costs and excessive regulation force companies to leave the U.S.
It is not Ford’s fault; but it is Washington’s fault.
With a corporate tax rate of over 30 percent and Obama’s environmental, labor and other regulations that increase the cost of running a factory in the United States as well as stifling innovation, companies such as Ford must utilize the tools given to them in agreements such as the North American Free Trade Agreement (NAFTA) which incentivize moving factories and jobs across the border or overseas.
Even Huffington Post’s Lori Wallach wrote in Jan. 2014 that on NAFTA’s 20-year anniversary it represented “a staggering $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada and the related loss of 1 million net U.S. jobs.”
As once iconic companies resembling the American dream, Ford, moves across the border, President Barack Obama is considering another international free trade agreement which will force even more Americans out of work, the Trans Pacific Partnership (TPP). An agreement, mind you, that Ford opposes. Moving jobs to Mexico must make executives at the company sick to their stomachs.
While TPP supporters hail the differences between this agreement and NAFTA, the TPP misses one critical element of contention which causes immense harm to the U.S., the TPP offers no protection against currency manipulation.
This practice, heavily employed by Asian countries interested in signing the TPP is found to have been a driving force for job loss and reduced gross domestic product. A study conducted by the Economic Policy Institute in March 2016 found that “currency-manipulation-fueled trade deficits have reduced U.S. gross domestic product, eliminated millions of U.S. jobs, driven down U.S. wages, and propelled the outsourcing of U.S. jobs to currency manipulators. In 2015, the U.S. deficit with TPP countries translated into 2 million U.S. jobs lost, more than half (1.1 million) of which were in manufacturing.”
Today, Ford is moving small car production to Mexico and attempting to maintain some U.S. based production; with the TPP in place even more production will eventually be forced overseas. Companies may not be able to compete by producing in America. It’s that simple.
In Michigan, which holds 16 votes in the electoral college, the thousands of people losing their jobs are aware of this reality and have already proven they are voting based on it. NBC exit polls from the Michigan primary showed that when asked overall how trade with other countries affected job creation 57 percent believed it took jobs out of the U.S.
This correlates with 57 percent of Democrats and 55 percent of Republicans who believed trade with other countries takes away U.S. jobs. Those people backed Bernie Sanders and Donald Trump overwhelmingly, as both were adamant fighters against the TPP and NAFTA. In the meantime, Ted Cruz and Hillary Clinton supported NAFTA.
Now Ford is proving once again to Michiganders that trade does take away jobs, as they are now going to be unemployed, leaving them with only one other option — voting for candidates who understand that high corporate taxes and increased manufacturing costs due to heavy regulation harm American manufacturers trying to compete in the world economy. If Michigan voters, who overwhelmingly have a negative outlook on economic conditions and consider it one of the most important issues currently facing the country, vote in the same fashion as they did in the primary, Michigan might easily be a red state on Election Day.
Clinton, who has flip-flopped on both TPP and NAFTA, has sparked distrust with voters on her stance on the issue. Now she says she’s against TPP, but can she be believed? In Michigan this could make all the difference for disgruntled former Ford employees losing their jobs to low wage Mexican workers.
Even before Ford’s announcement on Sept. 14, a Free Press-WXYZ-TV poll conducted Sept. 10 through Sept. 13 found Trump was already within 3 points of Clinton in the Great Lakes State.
Ford was meant to be a business representing the American dream and American innovation. Unfortunately, big government policies and bad trade deals have stolen that from the company. Now Ford’s decision becomes a symbol of U.S. economic decline. The next president will decide whether that changes or continues down the economic path the people of Michigan fear.
Natalia Castro is a contributing editor at Americans for Limited Government.