UPDATE 1-Ford plant turns ‘cemetery’ as Trump wrenches Mexican autos

(Adds supervision criticism on threats to investment)


By Christine Murray

SAN LUIS POTOSI, Mexico, Jan 6 (Reuters) – Ford Motor Co’s
sudden pierce to throw a designed $1.6 billion automobile plant in
central Mexico has spooked a network of suppliers who gamble on a
growing patron bottom and dramatized a risk that Donald
Trump’s bulletin poses to a country’s broader economy.

Many automobile tools makers had started to enhance in anticipation
of Ford’s plant in a state of San Luis Potosi, where industry
is “easily 70 percent” contingent on a automobile sector, pronounced Julian
Eaves, handling executive of Preferred Compounding de Mexico, a
U.S.-owned builder of rubber compounds handling here.

“It’s going to have a outrageous impact on a internal community,”
said Eaves.

The detriment to a economy, Eaves calculates, could run into
the hundreds of millions of dollars, and maybe even into the
billions, over a subsequent 5 years, as manufacturing,
contracting and surreptitious jobs all tumble brief of plans. Officials
say they are still examining a mercantile impact of a Ford
decision.

The hemorrhaging might be usually a commencement of Mexico’s pain
from Trump’s vows to shake adult trade and pierce prolongation jobs
back north when he takes bureau on Jan. 20.

Ford ascribed a pierce to a decrease in North American demand
for tiny cars like a ones it designed to make in San Luis
Potosi. But Trump had been lambasting Ford for a Mexico
operations, months before he was inaugurated boss in November.

Trump upped a ante on Thursday, melancholy to slap a
“border tax” on Japanese automaker Toyota Motor Corp
for cars it sells to a United States from a new plant in
Mexico, fueling fears of an all-out descent by his government
on Mexican industry.

Mexico’s supervision on Friday “categorically” deserted any
attempt to use threats to change investment decisions in
Mexico, observant it wanted to boost a competitiveness of North
America. It did not discuss Trump or Toyota in a brief
statement.

In a matter of days, Ford’s shelter has incited a factory
site into a empty plain bereft of a mercantile promise.

“It now looks like a cemetery,” pronounced Fernando Rosales, 28, a
hydraulic hoses executive scheming to desert a site.
“(There is) usually genocide here, we are all leaving.”

Ford’s preference also puts a brakes on Detroit automakers’
push to build tiny cars in Mexico to revoke labor costs, while
using higher-paid U.S. workers for larger, some-more expensive
vehicles.

Not distant from a cursed Ford site, other vital players from
the tellurian automotive attention are in a midst of multi-million
dollar investments, including General Motors Co, which
Trump has also regularly berated for investing in Mexico.

German carmaker BMW is convention a $1 billion
plant, and a few miles from a Ford site, Goodyear Tire
Rubber Co is bustling building a $550 million tire facility.

The U.S. president-elect’s broadsides opposite Mexico have
shown how unprotected companies in a supply sequence are to a whims
of U.S. automakers underneath vigour not to offshore production.

Shares in Kansas City Southern, one of a main
railroad operators in Mexico, fell following news of a Ford
cancellation and have mislaid 3.3 percent given Tuesday morning.

Between 40 and 50, mostly foreign-owned, suppliers were
ready to come and supply a San Luis Potosi plant, pronounced Sergio
Resendez of genuine estate attorney Colliers International.

“This was going to mortar us,” Gustavo Puente, a state
economy apportion of San Luis Potosi, pronounced of a plant Ford
originally announced in Apr of final year. Ford told him the
plan was off about an hour before it went open with a news,
he said.

Around 12 to 14 of a suppliers had already invested money
buying land or sealed a agreement with developers, pronounced Resendez
of Colliers, yet Puente suggested a series was fewer.

“It’s a very, really formidable hole,” Resendez said. “The
suppliers, depending on their turn of advancement, will lose
money. They had already done vast investments.”

‘KICK IN THE TEETH’

At a Ford premises, repelled and morose workers packaged up
construction materials and prepared to leave.

“This is a vast flog in a teeth,” Rosalio Rocha, 52, a
construction workman on a site from a circuitously city said.

“It looks like he is going to keep going on about it,” he
added, referring to Trump.

Some of a belligerent during a 280-hectare site had already been
leveled and a skeletons of dual large, white buildings stood
out opposite a rusty brownish-red and immature backdrop.

Workers pronounced they had listened skeleton for an industrial park
opposite a site for suppliers had also been suspended. The
park’s developers were not immediately accessible to comment.

The automobile zone is during a heart of a Mexican industrial boom
given a 1994 North American Free Trade Agreement (NAFTA)
between it, a United States and Canada, a understanding Trump has
threatened to renegotiate in preference of a United States or scrap
entirely.

“It hurts since we’re partners in trade, culture, sports,
we’re partners in everything,” pronounced Puente, a San Luis Potosi
economy minister. “It hurts since they – he – is pulling a
policy that wants to mangle those ties.”

About half of a unfamiliar approach investment (FDI) to Mexico
since a start of a century has come from a United States,
where it sends around 80 percent of a products exports.

Carmaking is no exception.

Mexico constructed 3.22 million autos in a initial 11 months of
last year, and exported 2.55 million, internal attention organisation AMIA
said. Fully 77 percent of a exports went to a United States.

Some Mexican states have come to count on autos almost
entirely for growth. In San Luis Potosi, 15,000-17,000 new
direct jobs are approaching to be combined in 2017, all in a auto
sector, according to sovereign labor nominee Edgar Duron. The
total does not embody a Ford plant, that had been expected
to emanate thousands of additional jobs in entrance years.

The San Luis Potosi state supervision had already paid part
of a 1 billion pesos ($47 million) it due underneath a agreement to
support a Ford plant, Puente said, but naming how
much. The sovereign supervision pronounced Ford would repay a sum.

Projects, both private and public, are underway to spend
hundreds of millions of pesos to enhance a city’s airfield and
build a new train line in expectancy of a busier future.

But a genuine fear in Mexico is that, as Trump himself
tweeted after a Ford decision, “This is usually a beginning.”

Outside a Goodyear plant in San Luis Potosi, 46-year-old
Marcos Rodriguez, an operative operative on a facility, pronounced that
Mexico should assume that other sites are during risk.

“Here there’s a lot of apparatus inside, so we consider it would
be a small some-more difficult,” he said. “(But) can they cancel it?
I consider they can.”

(Editing by Dave Graham, Christian Plumb and Mary Milliken)

Read a strange essay on Reuters. Copyright 2017. Follow Reuters on Twitter.


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