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What does Ford’s announcement mean for internationally minded businesses?

January 3, 2017 Blog 1 min read
Authors:
Alejandro A. Rodriguez
Just yesterday, Ford announced that it’s cancelling plans to build a new plant in Mexico, instead opting to invest $700 million in Michigan, creating 700 new jobs.

As CNN Money points out, this is surprising—“a major U-turn for Ford.” While it is a “vote of confidence” in president-elect Donald Trump as CEO Mark Fields states, the decision is also likely a reflection on Ford’s overall concern of an economic recession and the fact that they have too much overall production capacity in North America.  This allows them to reduce their future production capacity by (1) not building the Mexico plant, (2) reducing their capex spend, and (3) managing toward a smaller, more cost-efficient, NAFTA operation.

So what does this mean for other internationally minded businesses?  We’re advising our clients that this is a time for caution and flexibility. Leaders must know their risk points — for example, intellectual property or infrastructure — when considering overseas expansion. And, since the international tax landscape is also changing, businesses need to identify the best strategies while still being compliant. To learn more, check out our post-election international update >>

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