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OpEdNews Op Eds    H4'ed 12/4/19

Ford Motor Company Has Lost its Way

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I recently saw the movie "Ford v. Ferrari" and it was truly inspiring. Henry Ford II wanted to prove that Ford could make a racing car in the United States that could beat the best Ferrari in the 24-hours Le Mans race in France. Ford succeeded and beat Ferrari for the first time in 1966, finishing first, second and third.

Ford Motor Company was on top of the world fifty-three years ago. The Mustang was successfully launched in 1964 and Ford was very profitable. Now Ford is launching the first Mustang SUV. The good news is that the Mustang Mach E will be electric, albeit eight years behind Tesla's electric-car breakthrough. The bad news is that the new Mustang will be made in Mexico.

I am a Ford guy through and through. I have owned three Explorers, two Mustangs and a Thunderbird, all well-made in the USA. The Ford Motor Company provided the Made in the USA Foundation with its initial funding. Ford supported legislation that I proposed--the American Automobile Labeling Act--that requires all new cars must provide country-of-origin information on the window sticker. Now that law will require the new Mustang to state that it was made in Mexico and that its electric batteries were made in Poland. In sharp contrast, the Tesla SUV is made in the USA with USA batteries.

Henry Ford Would Not Have Approved of a Mexican Mustang

During the depths of the Great Recession, Henry Ford said, "No one loses anything by raising wages as soon as he is able. It has always paid us. Low wages are the most costly any employer can pay. It is like using low-grade material--the waste makes it very expensive in the end. There is no economy in cheap labor." Mr. Ford wanted his workers to be able to afford to buy the cars that they made. However, Ford Motor Company, led by Henry Ford's great grandson William Clay Ford, Jr., is going to make the Mustang Mach E in Mexico because of its cheap wages of $2.25 per hour. And the Mustang, made there with a $50,000 price tag, will not be affordable to Mexican workers. If Henry Ford knew about this he would roll probably over in his grave and disinherit his great grandson.

Why is Ford making a premium SUV in Mexico while Mercedes and BMW are making their sport-utility vehicles in the United States? Cheap labor is the only explanation. It is estimated that making this vehicle in Mexico will save Ford only about $1,000 per car, about 2% of the list price of the vehicle.

The United States Needs a Strong Manufacturing Base

On November 15 of this year, the Wall Street Journal published an article titled "Innovation Should be Made in the U.S.A." The conclusion of this extensive article was that "Offshoring by American companies has destroyed our manufacturing base and our capacity to develop new products and processes. It's time for a national industrial policy." Ford is not alone in abandoning U.S. manufacturing; General Motors and Chrysler are also to blame.

The U.S. needs a new national industrial policy. China has one. It plans to surpass the United States by 2030, building a high-income society based on manufacturing and technology. As a part of a new U.S. industrial policy, we need to revise the proposed U.S. Mexico Canada Free Trade Agreement to support, not undermine, our ability to manufacture high-tech cars, trucks, wind turbines, solar panels and batteries in the United States. The new policy needs to embrace technology, energy conservation and ensure that workers' wages keep increasing.

By Joel D. Joseph, Chairman,

Made in the USA Foundation

 

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Chairman, Made in the USA Foundation, economist and lawyer, author of ten books and hundreds of articles.
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