VILLA DE REYES, Mexico (AP) — Word
spread quickly through cellphone messages and shouts between
co-workers that Ford Motor Co. had canceled its new $1.6 billion car
plant at its sprawling 700-acre high desert site in north-central
"When I saw it on the phone, (I
thought), 'Well, no, it can't be,'" said Higinio Salazar, a
security guard who spent the past five months logging traffic into
and out of the site and hoped to have steady work for months to come.
"It was on orders of Mr. Trump," he said bitterly.
That was not the case, Ford insists,
but the perception here in Mexico's burgeoning auto assembly region
was largely that President-elect Donald Trump, who had promised for
months to bring manufacturing jobs back to the U.S. while at the same
time disparaging Mexicans, had made good before even settling into
the White House. Trump took a shot at Toyota on Thursday over its
move to make Corollas in this region, though the Japanese company
defended its plan.
Ford's announcement sent shockwaves
across Mexico, which has become tightly meshed with the U.S. economy
since the advent of the North American Free Trade Agreement, sending
80 percent of its $532 billion in exports across the border in 2015.
The U.S. government says $100 billion of that was in vehicles and
parts, making Mexico the biggest exporter of automotive products to
the United States. Mexico's auto plants now account for 20 percent of
all light vehicles built in North America, industry figures say.
State officials in San Luis Potosi did
not find out much earlier than Salazar that plans had been scrapped
for the long-awaited plant, which promised 2,800 direct jobs and more
than 10,000 indirect ones through Ford's supply chain. State Economic
Development Secretary Gustavo Puente Orozco said Ford told state
officials about an hour before CEO Mark Fields made the announcement
Puente said Ford made very clear it was
a "definitive cancellation," citing supply and demand
rather than politics.
"They told us that it was a market
issue — the issue that the Ford Focus that was the vehicle they
thought to build, this light vehicle they planned to build in San
Luis Potosi, they say the demand had dropped," Puente said.
Low gas prices have Americans turning
again to larger vehicles and Focus sales have fallen victim to that
trend. Fields said Ford will produce the Focus at an existing plant
in Hermosillo, Mexico, and use some of the savings to invest $700
million in an existing Michigan plant to make hybrid, electric and
The San Luis Potosi plant was well past
the theoretical stage and there were high hopes the state would see
further economic growth from the opening of its third auto plant —
General Motors Corp. has been producing the small Aveo and Trax
vehicles up the road since 2008 and a BMW plant nearby is scheduled
to begin production in early 2019.
The steel bones of Ford's plant had
begun to rise and signs designated the future spots for each part of
the operation, from "stamping" to "final warehouse."
On Wednesday, Fernando Rosales Ortuno,
who deals in hydraulic hoses for Parker Hannifin Corp. was pacing the
site's perimeter with cellphone pressed to his ear trying to arrange
for a trailer to get hauled away. It's essentially a portable store
that had been set up to service the big machines preparing the site.
He had hoped that once Ford was up and
running, the plant might become a long-term client.
"It hit us like a bucket of cold
water," Rosales said. "Everyone here was hoping for a lot
of growth in the state and this region, too."
Four clustered states in central Mexico
— San Luis Potosi, Queretaro, Aguascalientes and Guanajuato —
have seven auto assembly plants that are operating or will be within
the next two years. Around them are nearly 800 auto parts suppliers,
In San Luis Potosi alone, between
50,000 and 60,000 jobs depend on the auto industry. An average worker
in Mexico costs automakers $8 an hour, including wages and benefits,
compared to the $60 an hour that Ford said it was spending on an auto
worker in the U.S. at the end of 2015.
In Villa de Reyes' town square,
residents said the younger generation would be hurt most by the
Retiree Ignacio Segura Rocha said fewer
people from town are migrating to the U.S. now because the crossing
has gotten harder than when he went in 1977 and 1978. He said the
auto industry offers good alternatives for kids growing up on the
region's isolated ranches.
"They were already dreaming of
going there (to Ford), and at the last minute there's nothing,"
Construction worker J. Refugio Waldo
Contreras feels Trump is putting Mexicans in an impossible situation.
"This Trump, he doesn't want
people there, so where is he going to send them?" Contreras
asked. "And he doesn't want work to open here? So then he's
going to close the doors."
Trump also sent tweets this week
threatening to impose heavy tariffs on General Motors and Toyota cars
produced in Mexico for the U.S. market. GM said it exports only a
small number of Cruze hatchbacks it makes in Mexico. Toyota stood by
its plan to produce Corollas in Guanajuato, while stressing that its
production and employment in the U.S. will not be affected.
There were some notes of optimism among
Mexicans. As security guard Juan Gonzalez watched contractors haul
away giant earth movers on flatbed trailers, he said he didn't expect
the site to stay vacant for long.
"If it's not the United States it
could be Japan, China," he said. "This is going to
Jorge Alvarez, who spent five months at
the site working on perimeter roads, said his company had already
told him his next project will be at the airport, so work would
continue for him at least.
Another option could be that Mexico
turns inward and focuses more on developing its internal market, said
Roy Campos, president of the Mexico City-based Mitofsky consulting
group. According to industry figures, 82 percent of vehicles
manufactured in Mexico are exported now.
"Sooner or later, because of the
nearness and the border, the personal relationships, the human
relationships, the Mexico-United States relationship is going to
return to what it was or even better than before," Campos said.
"So meanwhile, develop the other markets that could be very
beneficial to Mexico."
Billboards welcoming Ford had been
sprinkled around San Luis Potosi in recent months. But only a day
after the company's announcement, the welcome sign across the highway
from the plant was already down.