Thursday, February 11, 2016

Why is Ford Moving Production to Mexico?

You might have noticed in the news recently that Ford is planning to open a large production factory in Mexico. That is where they will build the models that cost less than the most expensive ones. The knee-jerk reaction to this news is, "Big business is greedy! Corporate vultures! Unpatriotic boardroom vultures!"

But wait -- dig deeper to discover the reason why this decision was made. It turns out to be union worker greed. No, no; we're not union-bashing here. Just look at the facts. They just negotiated a new contract that made most production here in the USA financially untenable. And in doing so, they consigned a huge number of their union brothers to unemployment. Union brothers who have families, medical bills, and mortgages.

What the union needs is a healthy dose of reality. They were already among the highest paid laborers in the country before the new contract with some of the best benefits in the work force. Now they've killed the goose that lays the golden egg. And, further strained an already bloated unemployment and food stamp system.

No company in any sector of the economy can survive if they can't compete in their market niche. But wait, you say, they can still compete because GM and Chrysler will be affected too, right? While that is true, low cost imports also figure into the competition equation. Staying here in the US would be suicide. With the economy the way it is, buyers might want bling but the bottom line is what they can afford. So the move was inevitable.

This will all be a bit transparent to new car buyers because now they can buy a Mexican Ford for roughly the same price they would have paid pre-contract. The difference is that a Mexican worker will be feeding his family whereas an American will not. Thank you, union.

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