After Ford Motor Company’s abrupt decision to halt the building of a $1.6 billion car plant in central Mexico, potential suppliers are second-guessing their plans, as well, worried that President-elect Trump’s agenda will interfere with the Mexican economy.
Within just a few days, Ford’s recent decision turned the factory site into a barren plain.
“It now looks like a cemetery,” said Fernando Rosales, a hydraulic hoses contractor preparing to abandon the site. [There is] only death here, we are all leaving.”
Rosalio Rocha, a construction worker on what was set to be the Ford site, said, “This is a massive kick in the teeth.”
“It looks like he is going to keep going on about it,” he said, referring to Trump.
Julian Eaves, managing director of Preferred Compounding de Mexico, a U.S.-owned maker of rubber compounds in Mexico, said Ford’s plant was going to be in the state of San Luis Potosi, where industries are “easily 70 percent” dependent on the auto division.
“It’s going to have a huge impact on the local community,” he said.
According to Reuters, approximately half of the foreign direct investment (FDI) to Mexico comes from the U.S. – where it sends roughly 80% of its goods and exports.
Puente, the San Luis Potosi economy minister, said, “It hurts because we’re partners in trade, culture, sports, we’re partners in everything.”
“It hurts because they – he – is pushing a policy that wants to break those ties,” Puente said, referring to the 1994 North American Free Trade Agreement (NAFTA) between Mexico, the U.S., and Canada. It is a deal that Trump has threatened to renegotiate numerous times.
Julian Eaves calculates the loss to the economy could run into the hundreds of millions of dollars, and maybe even into the billions, over the next several years. However, officials stated that they are still analyzing the economic impact that comes from Ford’s decision.
“This was going to catapult us,” Puente said.
Sergio Resendez of real estate broker Colliers International said that roughly 12 to 14 of the suppliers had already invested money in buying land or signed a contract with developers, though Puente suggested the number was less.
According to Resendez, “It’s a very, very complicated hole. The suppliers, depending on their level of advancement, will lose money. They had already made big investments.”
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