The Ford Motor company since the year 2015 had planned to build a huge plant in San Luis Potosi, Mexico. However, in January 2017, the company’s CEO Mark Field announced that his company will no longer honour the plan but instead will concentrate on an existing plant in Hermosillo, Mexico. Further the CEO noted that the company will also in the place of the investment in Mexico, boost another $700 million assembly plant in Flat Rock Michigan. The decision was seemingly influenced by the then President-elect Donald Trump’s statements against companies shifting their focus of investment, outside the country. Trump had vowed to impose huge taxes on such company’s products. Ford’s CEO and generally the company was under the influence of the president’s plans and policies, when they decided to take up the decision to cancel the investment in Mexico.
Mark Fields while speaking to Neil Cavuto on Fox Business Network claimed that the decision made was for the betterment of the company’s business (Korosec, 2017). He further noted that the U.S under Donald Trump’s watch,would turn into a better manufacturing business environment (Korosec, 2017). He added that he believed that some of the policies the president was bringing up for the country would improve business for their company. The company according to Field would still go ahead with the decision whether or not Donald Trump would be the president. However, he claims to have notified both the President and his vice-elect of the decision (Korosec, 2017). Keenly considering the claims the CEO raises to justify the decision, one will notice some contradiction in his statements. He first states that it is due to the policies that the President was introducing to the country that he felt the United States would be a perfect ground for the company’s business to grow. Nevertheless in the next statement he contradicts himself by adding that whether or not Trump would be elected the company was to cancel the plan anyway.
Donald Trump, before being elected President, had very good relations with the Ford Company. However, after being elected as president he turned so critical of the Company’s plan to invest in Mexico. In a tweet with a link to a story highlighting Ford’s decision, Trump added a message that instead of the companies driving wealth and jobs for the citizens away, the U.S would become a great magnet for Jobs and innovation in the World (Woodall, Bernie & Shepardson, 2017). Earlier on the president-elect also had taken a hit at the largest auto-motor company in the U.S; General Motors. He stated on tweeter that the company was sending a Mexican model vehicle; Chevy Cruze, across the border for free. He warned the company to either make the model in the U.S soil or they will have to pay a huge amount of tax (Woodall, Bernie & Shepardson, 2017). Due to these sentiments from the incoming president it was seemingly wise for the Ford Motor Company to take the huge step of cancelling the plan to invest in Mexico.
Donald Trump being a republican, his main interest lies with the citizens of the United States alone. His repulsion with Mexico is evident in every aspect he deals with the country. From planning to build a wall in between the border to other sanctions he intended to apply to the country even before his election into office. The Ford’s CEO Mark Field seemingly did not want to cross lines with the incoming president who evidently knew how to crush his adversaries. Thus, in this way decided to improve the ties with the President by making the move. He covers this by stating that the Flat Rock Assembly Plant was to create over 700 jobs for the American citizens. He adds that the $1.6 billion meant to invest in Mexico will instead be used to create a new factory in the U.S to build high technology autonomous, electric vehicles and also the Mustang and Lincoln Continental (Woodall, Bernie & Shepardson, 2017).
The Ford Company had decided to extend the company to Mexico using such a large amount of investment because the labour in Mexico is way cheaper compared to the United States. When the amount required for labour is reduced, the profit will always increase in business. This was a good eyeing by the company, thus the explanation about Trump’s policies to improve business were a bit vague and not as clear as business-minded people would expect. When faced with the question based on this economical fact, Field says that the labour costs might be the same in Mexico but the market has changed. He claimed that the demand has dropped for small cars and according to the company’s policy, they have to assess the industry demand and then take a step towards business. Hence, in regard to their assessment of the contemporary market the capacity in Mexicowas not much needed. It is a good thing for any company to identify the nature of the market before making investment decisions, however, Field in this instance was just trying to draw the minds of all the interested parties from seeing how much Donald Trump had influenced his decision.
After all the contradictions in the month of January, 2017, in February once more the Ford company fell into limelight after the Mexican CEO Gabriel Lopez stated that the company will still continue with its plan in Mexico (CNNMoney, n.d). Lopez noted that the plans were laid in the year 2015 and the company had in no way intended to alter them (CNNMoney, n.d). This verily raised eyebrows especially because Mark Field had concluded that the move by the Company was a form of vote of confidence to Donald Trump’s administration. The uncertainty in the words of the two CEOs regarding the direction the company would head in Mexico reveals two contradicting sides sitting in the middle of the company. This was a managerial deficit and a weakness that if not addressed would result to massive losses.
Donald Trump after assuming office invited Field in the white house and often praised him distinctively amongst other heads of companies, for the move in Mexico. Field evidently from this decision was trying to maintain regards with the incoming president instead of prioritizing the investment needs of the company. The onlookers and basically the whole world is now in query concerning this topic. The Citizens of the United States have seen the power that their president possess to stir the decisions made by cooperate organisations and large companies. His efforts raised against the car industry depicts him as a president who might go a step further than his modern counterparts to influence corporate decisions and more importantly, those directly linked to investment and trade.
It is clear that the plant in Mexico would make the Ford Motor Company extra Billions. The decision taken by the company in 2015 would prove to be best for the company’s interest and in that way even bring back more in the United States. The Ford CEO, Mark Field here displayed some qualities of poor managerial skills. For instance, the contradiction he has with the Mexican CEO proves that he has no clearly defined goals for the company. Secondly, he does not follow the set standards of such a mega-company.
Conclusively, the decisions made and publicized by a company should be followed without being altered by anyone’s personal interests. The company had decided to follow a course of investment that would open up its market throughout Europe but due to the influence from the incoming President, they ended up changing the decision. Field should have enforced that standard despite the threats issued against them. This is because when a manager does not do this, it sends a signal to everyone that the company’s standards are not very important or relevant. It is the expectation of every observer of such a huge company’s dealings, to communicate its expectations clearly. This even promotes the market and people would be pleased to use the company’s product. It became clear to the public that the decision of Ford to canceltheir plan of investing in Mexico was a response to Trump’s criticism and intimidation. They could not risk being considered the incoming President’s adversary, nevertheless, by planning to continue with the plan in Mexico subtly, it is evident that the company is trying to redeem itself from the ill decision made in January.
Isidore, C. (2017, February 17). Despite Trump, Ford moves ahead with plans for Mexico plants. CNNMoney. Retrieved from http://money.cnn.com/2017/02/17/news/companies/ford-mexican-plants/
Korosec, K. (2017, January 04). Ford CEO: Trump’s policies played a part in our decision making. Retrieved from http://fortune.com/2017/01/04/ford-mexico-michigan-trump-mark-fields/
Woodall, B., &Shepardson, D. (2017, January 03). Chided by Trump, Ford scraps Mexico factory, adds Michigan jobs. Retrieved from https://www.reuters.com/article/us-usa-trump-autos-idUSKBN14N1T0