One of Donald Trump’s pre-election promises is coming true. Due to the heavy risk of pulling out the country from North American Free Trade Agreement, Ram will shift the production from Mexico to the USA. At this moment, Ram is planning a move of the heavy-duty segment production. This includes Ram 2500/3500 and Ram 4500/5500 trucks, that are currently built at Saltillo Truck Assembly Plant, Mexico.
The company will expand the factory in Warren, Michigan. In this purpose, chiefs in FCA (Ram’s owner), create the budget of around $1 billion. This also means more jobs for people near Detroit. Experts predict there will be 2,500 more open positions.
What happens with a facility in Mexico? It will be used in future. However, its purpose will be to make commercial vehicles for worldwide sale. Capacity is there, and Mexico still has many countries on the list for free trade.
Earlier in 2017, Ford dropped plans about moving production of its trucks to Mexico. Back then, the US president Donald Trump threatened with heavy taxes for import of these vehicles. Ram already had a factory in Mexico, so they could stay calm. For a while.
Now, Trump is considering to opt out of the NAFTA agreement. What does it mean for the truck industry? A 25 percent tax would be triggered and it doesn’t hit only the pickup market, but all vehicles produced in Mexico and delivered to the US. When we add that 90 percent of Ram’s heavy-duty segment is assembled in Saltillo, the loss of the FCA would be huge.
Well, Trump stood firm on its words that free flow of goods in North America hits the most its country. He pointed especially to carmakers and criticized because of the moving the production to Mexico. With it, companies are saving the money on taxes and lower payrolls of employees.
Ford Left Plans of Moving to MEX, Toyota to Build Trucks in Alabama
Chevrolet was the first that responded to Trump’s threats. The president criticized this company via Twitter about their tax-free production of 172k Chevy Cruze compact cars. As a response, Chevrolet stated they produce only hatchbacks in Mexico, which is a small percentage of overall sales.
Ford had plans to move its production to Mexico too. However, after Trump’s election, they had to change their minds. Moving to Mexico would mean cheaper work cost, but import taxes would not only annul the saving, but the biggest carmaker in the US would be in loss. Instead of $1.6 billion investment in new plants, Ford will invest $700 million dollars in next couple of years in 700 new jobs in Michigan factories.
Toyota and Nissan Also Move Production to the US
Other companies that will move its production to the US soil are coming from Japan. Toyota and Mazda are joining forces to build a plant in Alabama. Investment is worth $1.6 billion. This is a move Trump wanted to see, and the president himself praised this decision. So, in near future, fans could buy Tundra and Tacoma cheaper. Nissan is also close to the decision to move the production to Mississippi.