By David Whitford, Editor At large
My Ford Fusion, mostly made in Mexico.
The Fusion has been a big part of Ford’s (F) recent success. While it’s true that Ford still sells more big trucks and small SUVs than anything else, the Fusion is its best-selling car, and the category it occupies, midsize sedans, is hot. According to Edmunds.com, Americans have bought more midsize sedans over the past three years than any other kind of car or truck — especially middle-age Americans like my wife and me who are looking to save on gas. And within the category, Fusion’s market share is growing. So far this year it ranks fourth among 20 entrants, behind Toyota’s (TM) Camry, Honda’s (HMC) Accord and Nissan’s (NSANY) Altima.
Which is No. 1 in my book because I would never even think of buying a Japanese car. For me it’s a matter of principle. I used to be a union organizer. I ‘m a card-carrying, dues-paying member of the Newspaper Guild. I believe that strong unions don’t just raise living standards for the poor and the middle class; they’re part of what defines a healthy democracy. So as much as I can, I choose to spend my money on products made by union workers in America.
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It’s not easy and I’m not perfect. The shirt I’m wearing right now was made in the Philippines. My pants are from Bangladesh. But I buy my cellphone service from AT&T (T), because while the handsets unavoidably come from China, AT&T Mobility’s technicians and customer-service reps are part of the only union shop in the industry. And every eight or ten years, when it comes time to buy a new car, I try to make that one big purchase count for something I believe in.
Boy did I ever blow it this time. Not only was my new Fusion assembled at Ford’s plant in Hermosillo, in the Mexican state of Sonora, where there is no UAW, and auto workers earn less than $5 an hour. What’s worse, almost none of the parts that went into it were sourced in the U.S. Or even Canada — only about 20%, according to the 2011 American Automobile Labeling Act report. Setting aside the issue of union representation, I’d have done a lot better, patriotically speaking, if I’d chosen one of the non-union Japanese models: the Camry (80%), the Accord (80%), or the Altima (60%).
Ford’s Hermosillo plant opened with modest ambitions in 1986, ironically as part of a push to comply with Mexican local-content laws. Its export role grew with the arrival of the North American Free Trade Agreement in 1994. Today it employs 3,872 production workers, or nearly half of the more than 8,000 total employees of Ford Mexico. The company recently announced a $1.3 billion plant upgrade.
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“A very large part of the North American auto expansion is happening in Mexico,” says Harley Shaiken, a professor at the University of California, Berkley, who specializes in Latin American labor issues. Shaiken says that American, Japanese and German carmakers have recently announced plans to invest $6 billion in Mexico. He cites as Mexico’s big draws low wages, high quality, improving productivity, and convenient proximity to the second biggest car market in the world. (China has been first since 2009.) “The drug wars are real,” says Shaiken, “but so is this.”
You might argue that Mexicans need jobs, too, and since no one disputes that wages at the car factories are far higher on average than wages elsewhere in Mexico, my purchase was a net positive for North America. I was almost thinking that myself — then I spoke to Jim Stanford, chief economist with the Canadian autoworkers union.
Stanford has been noting with growing alarm the auto industry’s accelerating shift toward Mexico, which in 2009 surpassed Canada in the number of cars produced. He says Mexican autoworkers at the best factories like Ford’s earn between $5 and $6, including benefits (which in some cases include busses to work, because they can’t afford to buy cars). That’s about one-tenth of what they could make in Canada and the U.S. And what he finds most disappointing is that even two decades after NAFTA passage, not only has the wage gap not narrowed, it may even have grown. “There was a story that yes, there will be some movement to Mexico but trade will equalize the standards,” Stanford says. “That argument was never convincing in my mind but has not been borne out in practice.”
For those considering buying a Ford Fusion in the future, I have good news. Ford’s most recent contract with the UAW included a provision to shift overflow production of the Fusion beginning with the 2013 model year to a factory in Flat Rock, Michigan, where Ford is investing $555 million and creating 1200 new hourly jobs. (The only way to be sure you’re buying American is if the first digit of the vehicle’s VIN number is 1, 4 or 5. A 2 is Canada. A 3, like mine, is Mexico.) “Think of it this way,” Shaiken says to me, kindly. “You were a pioneer. Your heart was in the right place but production was a little slow in catching up to your concern.”
