Ford Motor Company scraps $1.6 billion Investment Project in Mexico

auto factoryFollowing the criticism from US President-elect Donald Trump on protectionist, Ford Motor Company decided to cancel the $1.6 billion investment in the state of San Luis Potosi and to pay back any expenses made by the state government to facilitate the investment.

Ford Motor Chief Executive Mark Fields told Fox Business that the decision was based on declining demand for small cars in North America and not on the presidential election outcome.

Ford’s decision to cancel the $1.6 billion investment in the state of San Luis Potosi is a big blow to Mexico. Mexico government regrets the decision of Ford Motor.

“The government was notified by Ford about its decision only “minutes” before it was made public”, said Ildefonso Guajardo, Economy Minister.

Ford informed that it would instead invest $700 million over the next four years to expand its Flat Rock Assembly Plant in Michigan to build electric and self-driving vehicles.

Earlier, US automaker General Motors was criticized by Trump, the president-elect, who threatened to impose a tariff on GM’s imports of a small number of Mexican-made Chevy Cruze cars to the US.

Felipe Calderon, the Former president of Mexico commented on Twitter that Ford’s decision “hurts Mexico, but also American consumers and its shareholders because the company will lose competitiveness.”

Trump has criticized US firms for moving jobs to Mexico and has announced to renegotiate the North American Free Trade Agreement (NAFTA).

According to Mexico’s economy ministry, investments in Mexico have helped keep jobs in the United States.”The jobs generated in Mexico have contributed to keeping manufacturing jobs in the United States that would otherwise have disappeared in the face of Asian competition,” it said.

Mexico’s has been a top place for international automakers making the country a top producer and exporter of vehicles due to free trade deals with various countries and closeness to the US market.

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