In an election season characterized by intense passions, the last few months have seen few hot-button issues as polarizing and as heavily covered as free trade and the offshoring of U.S. jobs, most visibly in the manufacturing sector.
Last Friday, Ford CEO Mark Fields announced to investors and stakeholders that the auto giant would shift all small-car production to Mexico within “the next two to three years.”
Though the move should hardly be a surprise, given that Ford has made several announcements since 2015 detailing incremental plans to shift production of certain models to Mexico, the headlines it generated were ready-made to rouse the emotions of the electorate.
In the ridiculous spectacle that is the 2016 presidential race, is an issue really newsworthy without a quip from a certain unnamed Republican nominee?
Clearly the most influential candidate for public office in the history of the universe, Donald Trump claims to have induced the move single-handedly. This is despite the fact that Ford announced its intention to relocate production of two models from Wayne, Michigan to another country in July 2015, well before Trump was considered a serious threat for the nomination, let alone the presidency.
And never mind the widespread trend of struggling domestic auto producers offshoring production processes to cheaper labor markets. Of course it was the mighty hand of Trump, a decidedly economically protectionist candidate, that hastened Ford into taking action.
A Gallup poll found that 35 percent of respondents believed the most important problem facing the U.S. centers around economic concerns. Trump, piggybacking off public ire he has helped create, said, “We shouldn’t allow it to happen. They’ll make their cars, they’ll employ thousands of people not from this country, and they’ll sell their car across the border.”
Ideally, production would remain in the U.S., and firms could operate affordably enough to employ domestic workers. However, few Americans, particularly those advocating domestic production for the sake of employment, understand the implications this would have on American consumers.
According to the Bureau of Labor Statistics, the hourly wage expense for a manufacturing worker in the U.S. in 2012 was nearly $36, whereas the same figure for a Mexican manufacturing worker was just $6.36.
In a poll conducted by the Associated Press, 75 percent of respondents expressed they would like to purchase American-made goods. This is in contrast to the 67 percent that admitted they would purchase a $50 pair of jeans produced in another country over an $85 pair produced domestically.
People want products “Made in the USA,” but they won’t pay for it.
This editorial is not intended to argue in favor of exploiting cheap labor. But offshoring labor to improve bottom-line performance is a natural response to trends inherent in open-border capitalist economies.
It’s understandable that Ford would opt for this decision, especially given the increased need for auto makers to invest in innovative technologies that are of interest to millennial buyers and whose share of the new car market increased to 28 percent in 2015.
Millennials, most of whom are in their 20s and earning less-than-stable wages, would likely opt for cheaper, foreign-made automobiles, just as respondents to the A.P. survey admitted they’d prefer cheaper jeans.
From Ford’s perspective, offshoring to lower labor costs is a reasonable course of action. It’s unfortunate, though, that the economic climate encourages firms to resort to borderline-exploitative labor practices to produce affordable products.
