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twintornados

United States-Mexico-Canada Agreement, or USMCA.

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I put this in the FoMoCo forum since it directly impacts the company we all enjoy....how will this affect future plant and manufacturing plans??

https://www.yahoo.com/finance/news/canada-us-reach-deal-stay-trade-pact-mexico-054333317--finance.html

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Only mention I saw with the auto industry is this:

 

The agreement reached Sunday gives U.S. farmers greater access to the Canadian dairy market. But it keeps a NAFTA dispute-resolution process that the U.S. wanted to jettison and offers Canada protection if Trump goes ahead with plans to impose tariffs on cars, trucks and auto parts imported into the United States.

 

 

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Only mention I saw with the auto industry is this:

 

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This part would directly impact US automakers...

 

https://money.cnn.com/2018/03/02/news/economy/steel-industry-statistics-us-china-canada/index.html

 

 

 

Nearly 17% of steel imported into the US comes from Canada, according to S&P Global Platts. South Korea, Mexico, Brazil and China are also major exporters to the US.
Edited by twintornados

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Over all seems pretty good to stem the loss of jobs south, will slightly increase the cost of vehicles getting some of the supply chain back to higher wage countries. However huge costs wont happen as some of that will be done with automation. Supply chain is already looking at the changes in country of origin rules. I dont think it will ever happen but what I would be interested to see is if a country goes over the threshold for importation of vehicles how does the tariff get applies. Is it starting with vehicles at that point, is it based on how many a manufacture sends as percentage of market share, or divided from that point among all.

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https://www.autoblog.com/2018/10/01/5-facts-new-north-america-trade-deal/

 

 

 

MEXICO CITY — The United States and Canada forged a last-gasp deal on Sunday to salvage a three-country, $1.2 trillion open-trade zone agreement with Mexico that had been about to collapse after nearly a quarter-century.

Here are some of the details in the agreement, which will change its name from NAFTA to the United States-Mexico-Canada Agreement (USMCA):

Automotive rules of origin

The deal set a 5-year transition period after the agreement enters into force for the regional value content requirement for autos to increase to 75 percent, from a current 62.5 percent. It requires 40 percent of vehicles' value to be made in high wage areas paying $16 an hour, requiring significant automotive production in the United States and Canada.

The pact also requires that vehicle manufacturers source at least 70 percent of their steel and aluminum from within the three countries.

The Washington Post cites economists who say these new rules will help some North American workers — however, they may push production of low-margin small cars out of North America because they would be too expensive to produce here. And the rules could also mean that automakers would be unable to afford to build as many cars here for export to China, the world's largest auto market. It will be more cost-effective to build those cars in Asia.

Autos side letter

A side-letter to the agreement showed that Trump preserved the ability to impose threatened 25 percent global tariffs on autos while largely exempting passenger vehicles, pickup trucks and auto parts from Canada and Mexico.

If Trump imposes so-called "Section 232" autos tariffs on national security grounds, Mexico and Canada would each get a tariff-free passenger vehicle quota of 2.6 million passenger vehicles exported to the United States annually, well above their current export levels.

Pickup trucks built in both countries will be exempted entirely.

Additionally, Mexico will get an auto parts quota of $108 billion annually, while Canada will get a parts quota of $32.4 billion annually in the event of U.S. autos tariffs.

...

 

I'm posting only the auto-related components in the article, there's more at the link regarding oil production, dairy, and dispute resolution.

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And what does this do to the tariff on the Canadian steel? Is that officially dropped?

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And what does this do to the tariff on the Canadian steel? Is that officially dropped?

Apparently theres a side deal with that still being negotiated.

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All of this does play to Ford's strengths since they are exiting the small economical car markets and focusing on lower volume margin rich products. It's definitely a bad deal for car companies as their costs continue to grow but Ford is already making those changes. This also helps to accelerate the move away from car ownership which Ford sees as the future and is part of their planing.

Edited by Assimilator

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Basically this was all hype, Trump came, he saw and he gave up. There are no material changes, unless you count name changes. I mean I'm glad they made the agreement since the problem isn't our fellow North American countries, Canada and Mexico. China on the other hand ..... But this whole Drama show has basically just created uncertainty - something capital intensive industries, like auto, hate. And one could argue it cost us the Focus.

 

"That suggests an emerging playbook for the Trump administration’s trade agreements. As with the revised U.S.-South Korea deal announced last week, the achievement is declared to be historic while the changes made are cosmetic. "

https://www.bloomberg.com/view/articles/2018-10-01/globalists-will-love-trump-s-new-nafta-deal

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. But this whole Drama show has basically just created uncertainty - something capital intensive industries, like auto, hate. And one could argue it cost us the Focus.

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One could make the argument that may have saved Focus, that is if Ford wants to revisit the shuttered plant construction project now that any production of a Focus sized vehicle for North American markets would get a POTUS 45 blessing...

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.

One could make the argument that may have saved Focus, that is if Ford wants to revisit the shuttered plant construction project now that any production of a Focus sized vehicle for North American markets would get a POTUS 45 blessing...

Or bring it back to its original home of Wayne Assembly

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The new agreement actually guarantees there will not be a Focus produced in NA because production quotas are strictly tied to wage tiers. So essentially this is leveling the playing field for US/CA workers, but it does increase consumers costs as carmakers are disincentivized to make cars affordably. Of course this only works if you keep tariffs on imports which we can guarantee is staying at this point. I'm not necessarily opposed to increasing the cost of goods and services, but it's not typically how an economy thrives IMO. But usually the market sorts this stuff out. This is a strangely liberal view of economics for a Republican President, never thought I'd look at a Republican as too protectionist. I regret that we are dismantling free market economics, the US has always benefited from it even while others failed to practice it. Just goes to show you economics has no political affiliation.

Edited by Assimilator

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Or bring it back to its original home of Wayne Assembly

 

Wasn't USDM Focus produced at Wayne or Michigan Assembly plants a major money loser for Ford? With Hackett's plan to get Ford "fit", it's unlikely Focus will return to Wayne Assembly. I don't think USMCA will change Ford's mind on that.

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Wasn't USDM Focus produced at Wayne or Michigan Assembly plants a major money loser for Ford? With Hackett's plan to get Ford "fit", it's unlikely Focus will return to Wayne Assembly. I don't think USMCA will change Ford's mind on that.

Technically speaking it was both, but it was never profitable at Wayne Assembly. Probably because it was a very old and inefficient line. The advantage to bringing Wayne back online is the building is mostly empty now (Except for the body sub assembly cells for DTP/KCAP, KTP and Louisville and the old CAL line) so they could redesign the lines basically from the ground up.

 

At one time it was very profitable at MAP when we were running 3 shifts full tilt from 2012 to 2015. After 3rd shift got cut it was barely making a profit, and in its last year to year and a half of production was a money loser.

 

Come to think of it, what happened with Wayne is the same situation Flat Rock finds themselves in now. The Mustang and Continental are still profitable, but it could be a lot better. It's a very old plant that has never seen a major renovation, something they probably should have done when they moved the Mustang over from Dearborn Assembly in 2005 but Mazda wouldn't have wanted to do it. The plant layout is still well though out (at least in the Final Assembly department) and could continue as is without too many changes but some of the clearances need to be addressed if they ever want to build anything taller than a sedan there. The equipment is also very old and breaks down a lot.

Edited by fuzzymoomoo

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Very interesting info fuzzymoomoo sir. Thanks for sharing!

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Or bring it back to its original home of Wayne Assembly

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Focus' original home for North American production was Hermosillo....

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Focus' original home for North American production was Hermosillo....

Was built in both locations.

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Focus' original home for North American production was Hermosillo....

If I remember correctly, the Focus sedan was assembled at Wayne, while the other variants were produced in Hermosillo Mexico.

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From 2000 model year till the 2004 MY, I think Focus sedans and wagons were built at Wayne, while the hatchbacks (3dr from 2000-2004, 5dr from 2002-2004) were in Hermosillo alsogside the Escort sedan (till 2002) and the ZX2 (till 2003). All Focus bidysryles were consolidated at Wayne for 2005 either refreshed model.

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From 2000 model year till the 2004 MY, I think Focus sedans and wagons were built at Wayne, while the hatchbacks (3dr from 2000-2004, 5dr from 2002-2004) were in Hermosillo alsogside the Escort sedan (till 2002) and the ZX2 (till 2003). All Focus bidysryles were consolidated at Wayne for 2005 either refreshed model.

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My 2001 Focus four door sedan was made in Mexico.

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If Ford is going to move any production from Mexico, it's going to be the Maverick (Mini Bronco) and Mach1. We won't see a Focus again. I don't think the Courier/Crossover vehicles will ever be made in the US since they are targeting Latin American markets as well.

 

I think it's going to be a trick just to fill up the factory space they have left after the cars are gone, that's allot of capacity.

Edited by Assimilator

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.

My 2001 Focus four door sedan was made in Mexico.

 

Hmmm, i also thought the sedans were built in Wayne those years. Anyway my 2000 Focus ZX3 Kona Edition Focus was built in Mexico - not sure where the Kona Mountain bike that came with it was built. It was a great car.

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