
Ford moving all production of small cars from U.S. to Mexico - ourmandave
http://www.usatoday.com/story/money/cars/2016/09/14/ford-moving-all-production-small-cars-mexico/90354334/
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6stringmerc
I think it's funny to see the "all" term be thrown about so much - yes, I'm
sure volume wise it's significant but across the model lines, it's really just
- wait for it - two models.

Oh wow, the Fiesta!

Look, I'm being glib but until Ford decides to move its true cash-cows like
the F-150 out of the country, I'm more inclined to deal with the nature of
globalization in manufacturing in rational ways. Calling the move "inherently
bad" is not my perspective. I remember when it seemed like Ford couldn't
design and build their way out of the dark ages, and then, lo and behold,
their European operations provided some much needed quality and design and
production guidance and it stabilized a large section of their global
footprint. Global companies have global concerns!

~~~
mywittyname
Well, three: C-Max, Focus, and Fiesta.

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mywittyname
This agreement was made back in 2015, so it's not really news.
[http://www.autonews.com/article/20150709/OEM01/150709864/for...](http://www.autonews.com/article/20150709/OEM01/150709864/ford-
to-move-production-of-focus-c-max-from-michigan-assembly)

The posted article fails to mention Ford will be producing two brand new
vehicles in this plant: the Ranger and a compact SUV, the Bronco.

~~~
riboflava
The return of the Ranger will be very welcome to me, if they don't screw it
up...

~~~
douche
I never got a good explanation of why they stopped building them. They were
good little trucks, not quite Tacoma-grade, but pretty capable.

~~~
mikeyouse
The best explanation is that they were starting to impinge on sales of the
F-150 -- which is probably the most profitable vehicle ever produced by
humans.

~~~
tadfisher
The problem was CAFE; the Ranger was too small and too inefficient to meet
increasingly stringent CAFE standards. CAFE rules are based on the "footprint"
of the vehicle, basically the area between the wheels, and in 2012 the "light
truck" target would edge past the Ranger's footprint/economy combination.
There's a detailed article here:
[http://www.thetruthaboutcars.com/2012/10/how-cafe-killed-
com...](http://www.thetruthaboutcars.com/2012/10/how-cafe-killed-compact-
trucks-and-station-wagons/)

Redesigning the Ranger to have a larger footprint results in a mid-sized
pickup only slightly smaller than the base model F-150, which is where the
sales-cannibalism problem comes in.

~~~
mikeyouse
Thanks for the link, I hadn't looked too closely at CAFE previously.

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racecar789
We are going thru a transition now, moving an assembly operation to Mexico. It
is a royal PITA. Customs paperwork is insane. The culture also, hard to get a
blunt honest answer about how it is "really going" at the factory.

The key to a successful move is to have a native US person embedded in the
Mexico plant. They can keep operations running and put out fires.

NAFTA requires lots of paperwork and reconciliation. If one can navigate the
paperwork requirements, then yes it is free trade. If not, have to pay an
assist to move goods back and forth.

~~~
gjolund
It helps if you speak spanish.

------
MrFoof
Decided to go to goodcarbadcar.net to get US sales numbers (they have Canada
as well) to see how much of this volume it represents.

In 2015 the Ford Brand sold ~2.502M vehicles in the US. For the cars being
moved over to Mexico...

* C-MAX - 21,768

* Fiesta - 64,458

* Focus - 202,478

* Total - 288,704

About 11.5% of units sold in the US, and I think all the vehicles they sell in
the US on their B3 (Fiesta) platform. Interestingly, not all C1 platform cars
are moving over, as the Edge (124,000 units) and Transit Connect (52,000
units) will continue to be built in the US, again, because they offer better
front-end margin.

~~~
alistairSH
I wonder if that's because of the chicken tax? The Transit Connect would fall
into that category for sure (at least in cargo/work van trims). Not sure about
the Edge (it's passenger only, so the tax might not apply).

~~~
brohoolio
Transit connect is made in turkey and Spain I believe. They tried to get
around the chicken tax but ended up losing to customs.

~~~
alistairSH
Yeah, I think they were importing them as passenger vans, then de-optioning at
port in Baltimore.

------
PhantomGremlin
NAFTA makes this possible.

But it's hard for me to see (in this case) the advantage of NAFTA for the USA.
There are now 675,000 auto jobs in Mexico. The majority of that production is
exported to the USA.

How does that help the USA? Do we really make it up in the goods we export to
Mexico?

~~~
sqeaky
We can already buy Ford Focuses super cheap. With the amount of competition in
the small car market it will only get cheaper.

By having the lower priced Mexican labor build the vehicles these can keep
getting cheaper without major investment in technology that is unlikely to pay
for itself and without reduction in American worker's wages.

This also allows American Factories to make higher profits by focusing on
making higher margin models without Ford having to give up a market segment.

Also, Security is generally better at American plants so by allowing the
foreign factories to only build the crap models they are unlikely to compete
on the unauthorized manufacturing market.

Also, This does put some money and infrastructure into Mexico so we can
benefit as their country has slightly fewer people try to cross the border
illegally.

This is simple division of labor. It lets Americans focus on more profitable
things, there is no way this is bad for Americans.

~~~
swyman
> without reduction in American worker's wages.

Those jobs would need to be replaced with something paying a similar wage for
this to be true. Otherwise you'd move along the demand curve for labor to a
point with the same number of total jobs and lower wages paid for each.

~~~
sjdchid
What are "those jobs" you're referring to? This announcement also includes new
models produced in the US and no layoffs as far as I can tell.

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fredgrott
As US auto makers adjust their manufacturing chains to squeeze more profits
out..I wonder if there is not a stock play on US suppliers vs Mexico
Suppliers?

------
mc32
Wonder if US auto workers took a page from French workers would US mfgs move
production so glibly.

~~~
ap3
What page is that?

~~~
vkou
General strikes, riots, car-burning. American blue-collar workers would rather
be dismantled one bit at a time, then act collectively.

~~~
zeveb
I'm glad American workers are above general strikes, riots and car-burning.
Those are the actions of children, not of adults.

~~~
vkou
They are the actions of adults who are about to have their means of survival
taken away.

Why are you against freedom of association (general strikes)? Should people be
serfs, without the right to refuse to work, in protest of working conditions?

~~~
sqeaky
He isn't against freedom, he is against childish gestures, none of which
actually change the general trend of the car sales in the market.

If small economy cars must be built cheaply then protesting with fires and
vandalism is more likely to get a factory shut down because of missed goals.

Moving these low end models to Mexico with their cheap labor allows the
Americans to build higher margin models and actually grow the company. No
wonder France has about 1/3rd the car exports the US does or about 1/7th
exports of Germany.

~~~
toomuchtodo
> No wonder France has about 1/3rd the car exports the US does or about 1/7th
> exports of Germany.

Who cares which country has more exports or GDP? I care about quality of life,
not which shareholders are reaping the most benefits.

~~~
sqeaky
One is a proxy for the other. The more your export the more money you probably
have. In general the more money the higher your quality of life.

Stated another way American factory worker's quality of life is good enough
they have never needed to degenerate to setting fires. They have more
effective systems in place.

~~~
vkou
If all of a country's exports were produced by entirely robot-ran factories
with no employees, the country could be quite wealthy... With absolutely
terrible quality of life. (Without aggressive redistribution.)

Wealth only trickles down in fairy tales, or through low profit margins.

~~~
sqeaky
That is not yet possible. When that does become possible you statement will be
true.

The quality of life then becomes dependent on whether or not people need to
fight for a UBI and other wealth ditributing mechanisms because likely tons of
jobs have been completely automated destroying conventional labor markets..

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alexdgg
[https://en.m.wikipedia.org/wiki/Henry_Ford](https://en.m.wikipedia.org/wiki/Henry_Ford)
Ford supported the Nazis and american anti semitism

very public knowledge.

~~~
vinay427
In case you didn't realize, he's no longer alive, so I'm not sure how this is
relevant. Besides, he donated most of his wealth to create what was then one
of the largest humanitarian foundations in the world.

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jackhack
I fail to see how this is technology or startup related, and therefore
appropriate to HN. Seems more political/financial so not a good choice for HN
(especially frontpage).

(edit: for the downvoters...
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)
"If they'd cover it on TV news, it's probably off-topic." but do what you
must.)

~~~
hkmurakami
Supply chain is certainly part of technology.

