Ford Motor Not to Shift its Production to Mexico, is Donald Trump the Reason?

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The company says to have never considered shifting its production facilities to the region

Newly elected president Donald Trump has taken credit for stopping Ford Motors Company (NYSE:F) from shifting its production to Mexico. The 70 year old president said that he received a call from Ford’s executive chairman Bill Ford, who said that the company does not plan to switch production to Mexico. Perhaps the policies of the new elect are not friendly for multinationals who want to shift production to foreign regions, as he insists them to open production facilities in the US only.

As for Ford, the company says to have never considered shifting its production facilities to the Northern America region, although it did inform Mr. Trump about its decision to stick to Kentucky. The $47.09 billion company has its production facility in Kentucky, where it builds its Lincoln MKC small sport-utility vehicles at the Louisville Assembly Plant. Although human capital is cheaper in Mexico, there are some repercussions of shifting, as Trump has warned of higher tariff’s, should the company plan to start manufacturing elsewhere.

The policies of the Republican candidate are positive for the auto sector, as he insists companies to build the vehicles locally, while they will also protect against foreign brands. Moreover, he also said that he is going to enter into a trade war with China, which accounts for majority of the sales of US automakers.

The automaker seems to be doing well on fundamental grounds, as it reported a modest bottom-line. Moreover, investors are optimistic as short interest has decreased by 10% as per recent data. Institutional investors such as Vanguard Group and Evercore Trust also hold long positions in the company

Additionally, the Street seems to be optimistic about the future, as renowned sell-side firms including Bank of America and Credit Agricole stick to price targets with decent upsides. The consensus price target of $13.93 implies a more than 17% upside over yesterday’s close.

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