A worker at the near-deserted Ford construction site rides past an unfinished building, one day after Ford announced it was cancelling plans to build its plant in Villa de Reyes, Mexico, on Wednesday, Jan. 4, 2017.Rebecca Blackwell/The Associated Press
Word spread quickly through cellphone messages and shouts between co-workers that Ford Motor Co. had cancelled its new $1.6-billion (U.S.) car plant at its sprawling 700-acre high desert site in north-central Mexico.
"When I saw it on the phone, [I thought], 'Well, no, it can't be,'" said Higinio Salazar, a security guard who spent the past five months logging traffic into and out of the site and hoped to have steady work for months to come. "It was on orders of Mr. Trump," he said bitterly.
That was not the case, Ford insists, but the perception here in Mexico's burgeoning auto-assembly region was largely that U.S. president-elect Donald Trump, who had promised for months to bring manufacturing jobs back to the United States while at the same time disparaging Mexicans, had made good before even settling into the White House. Mr. Trump took a shot at Toyota on Thursday over its move to make Corollas in this region, although the Japanese company defended its plan.
Ford's announcement sent shockwaves across Mexico, which has become tightly meshed with the U.S. economy since the advent of the North American free-trade agreement, sending 80 per cent of its $532-billion in exports across the border in 2015. The U.S. government says $100-billion of that was in vehicles and parts, making Mexico the biggest exporter of automotive products to the United States. Mexico's auto plants now account for 20 per cent of all light vehicles built in North America, industry figures say.
State officials in San Luis Potosi did not find out much earlier than Mr. Salazar that plans had been scrapped for the long-awaited plant, which promised 2,800 direct jobs and more than 10,000 indirect ones through Ford's supply chain. State Economic Development Secretary Gustavo Puente Orozco said Ford told state officials about an hour before chief executive Mark Fields made the announcement on Tuesday.
Mr. Puente said Ford made very clear it was a "definitive cancellation," citing supply and demand rather than politics.
"They told us that it was a market issue – the issue that the Ford Focus that was the vehicle they thought to build, this light vehicle they planned to build in San Luis Potosi, they say the demand had dropped," Mr. Puente said.
Low gas prices have Americans turning again to larger vehicles and Focus sales have fallen victim to that trend. Mr. Fields said Ford will produce the Focus at an existing plant in Hermosillo, Mexico, and use some of the savings to invest $700-million in an existing Michigan plant to make hybrid, electric and autonomous vehicles.
The San Luis Potosi plant was well past the theoretical stage and there were high hopes the state would see further economic growth from the opening of its third auto plant – General Motors Co. has been producing the small Aveo and Trax vehicles up the road since 2008 and a BMW plant nearby is scheduled to begin production in early 2019.
The steel bones of Ford's plant had begun to rise and signs designated the future spots for each part of the operation, from "stamping" to "final warehouse."
On Wednesday, Fernando Rosales Ortuno, who deals in hydraulic hoses for Parker Hannifin Corp., was pacing the site's perimeter with a cellphone pressed to his ear trying to arrange for a trailer to get hauled away. It's essentially a portable store that had been set up to service the big machines preparing the site.
He had hoped that once Ford was up and running, the plant might become a long-term client.
"It hit us like a bucket of cold water," Mr. Rosales said. "Everyone here was hoping for a lot of growth in the state and this region, too."
Four clustered states in central Mexico – San Luis Potosi, Queretaro, Aguascalientes and Guanajuato – have seven auto assembly plants that are operating or will be within the next two years. Around them are nearly 800 auto parts suppliers, Puente said.
In San Luis Potosi alone, between 50,000 and 60,000 jobs depend on the auto industry. An average worker in Mexico costs auto makers $8 an hour, including wages and benefits, compared with the $60 an hour that Ford said it was spending on an auto worker in the United States at the end of 2015.
In the Villa de Reyes town square, residents said the younger generation would be hurt most by the cancellation.
Retiree Ignacio Segura Rocha said fewer people from town are migrating to the United States now because the crossing has gotten harder than when he went in 1977 and 1978. He said the auto industry offers good alternatives for kids growing up on the region's isolated ranches.
"They were already dreaming of going there [to Ford], and at the last minute there's nothing," he said.