'Trump Effect' A Factor In Ford Decision

Donald Trump won't officially become President of the United States until January 20th but he's already having an influence on business. What's being described as the 'Trump Effect' gets at least part of the credit for a major announcement by Ford.

As AM800 News reported yesterday, the automaker has scrapped plans for a $1.6-billion investment in Mexico and, instead, will spend $700-million to expand its plant in Flat Rock, Michigan.

At the University of Windsor, Business Professor Emeritus Dr. Alfie Morgan says companies that moved to Mexico to save on wages have learned a hard lesson. Only about 6-percent of the cost of a car is labour but Morgan says that may not be enough to offset the downside of doing business in Mexico including crime, the environment and transportation costs. "In order to just save something out of the 6-percent, you have to move this whole operation to Mexico and put up with all the headaches that are encountered in Mexico. Maybe they're coming to their senses. Maybe the age of offshore production is possibly at the beginning of the end."

Chris Taylor, the President of Unifor Local 200 in Windsor, says Canada could learn a thing or two from the President-elect. "I think what is very clear is that if government is willing to reach out and stand up and say, 'This is our policy going forward,' or at least some kind of strategy, then good things can happen."

The expansion in Flat Rock will create 700 new jobs and see high-tech electric cars and self-driving vehicles built alongside the Ford Mustang and Lincoln Continental.

(With files from AM800 Reporter Teresinha Medeiros)