How will Trump's Carrier deal affect planned auto industry moves?

The president-elect's personalized appeals to companies, including Ford, also prompted a warning from a stalwart ally – Sarah Palin.  

Ford executives say that their plan to shift production of small cars, like the Focus, to a new plant in Mexico will go on as planned, while acknowledging that their earlier decision not to move production of a different car from Kentucky to Mexico was influenced by President-elect Donald Trump.

The announcement came a day after Carrier Corp. – like Ford, a frequent target for Mr. Trump on the campaign trail – said it would keep open a furnace plant in Indiana, sparing about 800 employees’ jobs, in exchange for $7 million in tax breaks.

In the case of Ford, neither decision would have any effect on the jobs of US workers, CEO Mark Fields told the Wall Street Journal on Friday.

“This isn’t a Carrier situation,” said Mr. Fields. “When you look at moving the Focus out of our Michigan assembly plant, that’s to make room for new products – zero jobs affected, zero jobs impacted.”

In November, the president-elect took credit for persuading Ford not to relocate the Louisville, Ky., plant to Mexico. In fact, the plant had only planned to relocate production of a Lincoln SUV – not the jobs of the people who made it – since the terms of a 2015 agreement with the United Auto Workers Union prohibited it from doing so without further negotiations with the union.

But Mr. Fields also said that Trump had “influenced” Ford's decision to keep Lincoln SUV production in the US, applauding what he called favorable proposals from the president-elect on tax reform and infrastructure spending.

That may illuminate a key strategy for Trump’s brand of conservative populism: strike a hard rhetorical line on corporations while dangling a carrot of tax breaks and other favorable terms. And in the short term, at least, manufacturing execs may seek to cozy up to the new administration to spare their bottom line – and possibly reap the public-relations benefits.

Bill Ford, great-grandson of the automaker’s founder, penned a congratulatory letter to Trump after the elections, and even called him to say that the company wouldn’t shift Lincoln production to Mexico, according to the Journal. 

But it’s unclear whether these early gestures might provide a model of personalized exemptions from Trump’s promise to impose big, industry-wide tariffs on vehicles and other goods imported from Mexico and China.

That possibility awakened concern from an unexpected corner on Friday, when former Alaska Gov. Sarah Palin warned in an op-ed for website The Young Conservatives that despite her approval of the Carrier deal, “political intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist … isn’t the answer.”

“When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent,” she wrote.

“Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail.”

Fields warned that Trump’s tariff proposals would have a “negative impact” on the US as well as in Mexico and Canada, Bloomberg reported, pointing to the deep integration of production and supply chains across the three countries.

“It would be imposed on the entire industry, not just singling out a single company,” he said.

Other Ford execs struck a confident tone about the new administration’s policies.

"I think governing and the campaign are two different things," Ford's chief financial officer, Bob Shanks, told the Free Press. "I am hopeful and optimistic that this change in tone will carry forward into policies that … will be quite different than the prior administration but will be positive for growth."