Skip navigation
2016

According to one estimate, by 2020, 75 percent of new cars will have Internet connectivity, and will consequently be vulnerable to hackers, U.S. Assistant Attorney General John Carlin said in a recent keynote address.

 

“Not long ago, we could hardly imagine cars would be opened by fingerprints, drive by themselves and feature forward-collision warning and automatic-emergency breaking. But by 2020, there could be 220 million so-called connected cars on the road, each with more than 200 sensors,” Carlin said when speaking at a Society of Automotive Engineers event in Detroit. “The same innovations that revolutionize the auto industry create vulnerabilities if not carefully deployed. Potential access to vehicle control systems could be used against us to undermine the very safety the technology was designed to provide.”

 

Last month, the FBI, along with the Department of Transportation and the National Highway Traffic Safety Administration, released a public service announcement warning that cars are “increasingly vulnerable to remote exploits” through USB, Bluetooth or Wi-Fi technology in the vehicle. The announcement warns that not only is any data shared on the vehicle’s computer susceptible, there is also the possibility of having a car exploited remotely to allow someone the “ability to manipulate critical vehicle control systems,” the announcement said.

 

“There is no Internet-connected system where you can build a wall that’s high enough or deep enough to keep a dedicated nation-state adversary or a sophisticated criminal group out of the system,” Carlin said. “You may have excellent cyber defenses, but recent experience has taught us that we are only as strong as our weakest link. Hackers will use any available route into your system, and today, the most efficient path may be through those you let inside otherwise excellent defenses—third-party trusted vendors, subcontractors and others who may not share your standards.”

 

However, Carlin went on to explain that there are numerous steps automotive engineers can take to mitigate the risk, protect their companies, and, ultimately, he said, protect the cyber security of the U.S. The first step is to design vehicles with security in mind. As cars are increasingly connected to the outside world via cellular, Bluetooth and other exposed entry points, control systems must be engineered from the outset with security in mind. That means building cyber security into all phases of product development, beginning with the concept and product design, Carlin said.

 

Next, companies must realize that malicious actors can always exploit outside vendors. Therefore, Carlin advised, companies must consider guidelines to govern third-party access to the network and ensure that contracts require vendors to adopt appropriate cyber security practices.

 

Another key step is to always strive to protect the company’s bottom line, particularly when it comes to risk management. Companies increasingly consider cyber insurance, and Carlin recommends evaluating how that may fit into a risk management strategy.

 

“Finally, do not go it alone. We are safer when we work together to track and share cyber threats and to identify trends and common weaknesses,” Carlin says. “I commend the industry for recently establishing its own sector-specific information sharing and analysis center—the Auto-ISAC—which serves as a hub for the industry to share, in real time, cyber threat information and countermeasures.”

 

Carlin did also note that collaboration between government and the private sector is critical to the country’s ability to successfully prevent, investigate and attribute cyber attacks. The U.S. government can, he continued, provide automotive engineers with information to protect the manufacturers’ networks. “We also may be able to take actions to disrupt and deter the attackers that you cannot take by yourself,” Carlin said.

 

What are your thoughts on cyber vulnerabilities that stem from the increasing connectedness of today’s cars? Secondly, how do you think Auto-ISAC can help the automotive industry?

If you follow baseball, you may already know that Chicago White Sox first baseman Jose Abreu had a spectacular rookie season last year, including hitting 36 home runs, which is a team record. What few people know, however, is that at the same time, he also was paying off a huge financial debt to the people who helped him escape from his native Cuba. Abreu’s case, along with that of other Cuban baseball players, has put human trafficking in the news—where it rightly should be.

 

Newly unsealed court records describe the illegal smuggling that brings Cuban baseball players into the U.S. For Abreu, according to federal prosecutors, that included allegedly paying $5.8 million, transferred in three separate payments over nine months, to people who aided his defection, the Chicago Tribune reports.

 

The smuggling activity has come to light as part of an indictment in a South Florida case against one of Abreu’s former agents, Bart Hernandez, who was indicted in February on charges related to human trafficking. The indictment details how smugglers made payments to boat captains, including $160,000 for Abreu’s captain, and falsified documents to help top Cuban prospects eventually find their way to the U.S. to play professional baseball, the Tribune article reports. In return, the players were instructed to make large payments to the individuals who arranged their escapes, according to prosecutors.

 

When it comes to human trafficking, Abreu and other Cuban baseball players are lucky in that they didn't end up in forced labor camps. The International Labour Organization explains that the most common form of human trafficking is forced labor in domestic work, agriculture, construction and manufacturing. The organization estimates that almost 21 million people are victims of forced labor—11.4 million women and girls and 9.5 million men and boys; almost 19 million victims are exploited by private individuals or enterprises and over two million are exploited by the state or rebel groups; and that forced labor in the private economy generates U.S. $150 billion in illegal profits per year.

 

Domestic and global regulations—such as the California Transparency in Supply Chains Act; U.S. Federal Acquisition Regulations guidelines around Human Trafficking; and the U.K. Modern Slavery Act—aim to eradicate human trafficking through requirements for mandatory audits and supply chain reporting. Failure to comply may result in fines and, potentially, barring of goods from entering certain countries. Although many companies are willing to achieve compliance that enables the ethical procurement of goods and services, it can be challenging to gain transparency into the multiple layers of their global supply chain.

 

I was interested then to see that Dun & Bradstreet now offers what it calls its Human Trafficking Risk (HTR) index, a solution designed to help companies better manage their global supply chains. Dun & Bradstreet uses proprietary data from its global database, along with public data from the U.S. Department of State and the U.S. Department of Labor, to analyze conditions surrounding areas where goods are produced and assign a score to that region and commodity. It then creates an index of those scores to assess a company’s risk of being associated with goods and services potentially tied to human trafficking.

 

“Companies want to be responsible corporate citizens, but we hear time and again that they are underprepared and overwhelmed to meet supply chain due diligence requirements,” says Greg Iaquinto, leader in Global Supply & Risk Solutions, Dun & Bradstreet. “We are pleased to use our data and analytics to help customers manage their crucial business relationships by gaining greater insights and more transparency into the many layers of vendors and suppliers they do business with directly or indirectly.”

 

An argument can be made that companies, both large and small, need to gain increased visibility into all layers of their supply chain to address human trafficking because businesses and consumers alike increasingly make purchasing decisions based on brand reputation and responsible corporate practices. More importantly, working to end human trafficking and forced labor should be done simply because it is the right thing to do.

I was interested to read recently about expectations for marine vessel automation, and how remote controlled and autonomous ships may change the shipping industry. The flip side of the coin, is that as ships become more technologically sophisticated and better connected, cyber security becomes a crucial challenge for the maritime sector.

 

Speaking at a recent conference, Mikael Makinen, Rolls-Royce, President – Marine, said that autonomous shipping is “the future of the maritime industry” and that the smart ship will “revolutionize” ship design and operations. Jouni Saarni, development manager, Centre for Collaborative Research at the Turku School of Economics, also said that remote controlled and autonomous ships have “the potential to redefine the maritime industry and the roles of the players in it, with implications for shipping companies, shipbuilders and maritime systems providers, as well as technology companies from other sectors, especially automotive.”

 

Constant real-time remote monitoring of vessels worldwide will see ships become more closely integrated into logistics or supply chains, enabling global companies to focus on using a whole fleet to best effect, generating cost savings and improving revenue generation, according to the Rolls-Royce led Advanced Autonomous Waterborne Applications Initiative. This has the potential to create new shipping services, such as on-line cargo service marketplaces, more efficient pooling and leasing of assets, and new alliances, it explains.

 

While there is enormous potential, such widespread use of technology also introduces security risks. For example, much of what transpired off Somalia and the Gulf of Aden in years past occurred when pirates used hackers to gain access to shipping company’s databases and vessel tracking systems to identify vessels with valuable cargoes, writes Captain Emil Muccin, Assistant Department Head, Maritime Business Division of the Marine Transportation Department and an Associate Professor of Nautical Science at the United States Merchant Marine Academy, in a Maritime Executive article. The result was that crews of ships traveling the Gulf region would turn their Automatic Identification System (AIS) navigation tracking system off so pirates couldn't identify, locate and track them. This, in turn, also creates a danger to navigation since prudent mariners look for AIS data to handle vessel traffic, he explains.

 

There are scores of cyber incidents in the maritime world—some verified, some unverified—including reports of hackers shutting down a floating oil rig by tilting it, and stories of another rig so riddled with computer malware that it took 19 days to make it seaworthy again, Captain Muccin writes. At a recent conference, the Captain of the Port of Antwerp, Belgium discussed hackers infiltrating the port’s wireless network to locate specific containers loaded with smuggled drugs--then made off with the containers and deleted the records in an attempt to cover up the theft, he continues.

 

Unfortunately, marine cyber vulnerabilities will only grow. Recent studies by the European Union Agency for Network and Information (ENISA) and the Brookings Institute indicate there is limited awareness of cyber security issues in the maritime sector—and no large scale initiatives underway for improvements, Muccin reports. One notable exception is the United States Coast Guard, which published a Cyber Strategy to guide its efforts in the cyber domain last summer. The strategy specifically identifies three distinct strategy priorities: defend cyberspace, enable operations and protect infrastructure.

 

“All of these priorities should be embraced by maritime operators as they attempt to come up to speed to secure their vessels and interests,” Captain Muccin writes. “Out at sea does not mean out of reach of the cyber world–it’s only because so few know much about the industry that more attacks haven’t already occurred.”

 

It will be interesting to see not only how autonomous ships may have an impact on logistics or supply chains, but how the maritime industry can learn from initiatives in other industries, such as automotive and aerospace, to address cyber vulnerabilities and mitigate risk.

The earthquakes in Japan last Thursday and Saturday, which killed at least 41 people, show just how vulnerable supply chains are to natural disasters. They also put companies’ lean supply chains and contingency plans in a spotlight.

 

Toyota announced on Sunday it would suspend much of its production at plants across Japan this week as it was unable to source parts from some of its suppliers, including affiliate Aisin Seiki. Meanwhile, Honda said it would keep production suspended at its motorcycle plant near the earthquake-hit city of Kumamoto in southern Japan through this Friday.

 

Sony also released a statement, announcing that production would remain halted at its image sensor plant in Kumamoto, as the company continued to assess structural and equipment damage. It did announce, however, that it had resumed full operations at its plants in nearby Nagasaki and Oita, which also produce the sensors used in smartphone cameras such as Apple’s iPhone.

 

Also on Sunday, semiconductor manufacturer Renesas Electronics confirmed it had sustained damage to some equipment at its plant in Kumamoto that produces microcontroller chips for automobiles. Having suspended operations following the first earthquake on Thursday, the chipmaker said it would assess damage at the entire facility before deciding when to resume production.

 

The aftermath of these earthquakes will certainly test the business continuity plans that many Japanese companies created after natural disasters hit the nation’s east coast five years ago and disrupted operations for months. The 2011 earthquake and resulting tsunami, which led to a nuclear disaster and nearly 20,000 deaths, badly decreased production output. Since then, many companies have made efforts to address supply chain risk and vulnerabilities.

 

For instance, since 2011, Toyota, which spent weeks at the time identifying how its suppliers had been affected by the earthquake, and Nissan have both developed supply chain databases which offer a detailed view of their supplier base to identify how their supply chain may be disrupted during emergencies. The resulting strategy is particularly important for Toyota because it relies on domestic manufacturing more than its peers. The company and its affiliates made more than four million vehicles in Japan last year—40 percent of their worldwide output. In contrast, Nissan and Honda’s shares of auto production from Japan were 17 percent and 16 percent, according to a Bloomberg article.

 

“Owing to the lessons learned from the Great East Japan Earthquake, the automakers and their suppliers have together built up strong procurement networks for components that can be rapidly restored following disasters,” Nomura Holdings analysts wrote in a report Monday, Bloomberg notes. “As such, even supposing that production at Japanese automakers is affected for several weeks, we think that they will quickly return to normal and be able to minimize effects” to full-year earnings.

 

One key component for Toyota will be the response from Aisin Seiki, which produces engine, drivetrain, body and chassis, aftermarket and other main automotive parts for various major OEMs. The company’s plants in Kumamoto sustained damage from the recent earthquakes, and a company spokesperson said the company will make the parts produced in those facilities at home and abroad. The parts include sun roofs, door handles, semiconductors and other products.

 

“As a Toyota-affiliated company, we don’t hold significant inventory,” an Aisin spokesman said, Reuters, reports. “So as a rule we wouldn’t have been holding inventories to last, say, one week or a month. If there’s a part we make in Kumamoto which is identical to a part we make at the Aisin headquarters in Aichi [in central Japan] we’ll shift production there.”

 

  While it will be interesting to see how resilient these supply chains are and what—if any—long-term impact comes into play, our thoughts are also with the people of Japan.

As companies increase their spending on supply chain technology, a growing number are turning to robotics and automation. In an annual survey by logistics industry group MHI and Deloitte, 51 percent of the respondents said robotics and automation are a source of either disruption or competitive advantage, up from 39 percent of the respondents last year. Out of the 900 supply-chain professionals surveyed, more singled out those fields than technologies in wider use, such as inventory or network management tools, cloud computing and sensors.

 

A majority of the respondents said their organization now plans to spend more than $1 million on emerging technologies in the next two years, with 12 percent of the respondents saying their company will spend more than $10 million, and three percent expect the company to spend more than $100 million. Nearly 35 percent of the respondents said their company has already adopted robotics into their supply chains, and that number is expected to grow to 74 percent of the respondents in the next six to 10 years, according to the report.

 

Hytrol Conveyor, one of the largest manufacturers of industrial conveyors in the Americas, has used automation technology to reduce “wasted activity” in its facilities, such as time spent walking around, and to improve consistency, says Gregg Goodner, past president of Hytrol and a current board member, in a Wall Street Journal article. It gives the company a competitive advantage, he says.

 

“Customers today demand their suppliers be able to deliver their product faster,” Goodner says in the Wall Street Journal article. “Their demands are stronger, and you’ve got to be able to meet them or, quite truthfully, you don’t play in the game.”

 

In a separate survey of managers at freight forwarders by shipping software company Freightos Ltd., 68 percent of the respondents said warehouse robotics would profoundly impact their industry. On the other hand, only 49 percent of the respondents believe 3D printers will have a major impact, and only 32 percent of the respondents see drones and self-driving trucks having significant effect.

 

“While the vast majority of forwarders agree technology is the future of freight, they see many types of technology as over-hyped,” according to the report. “Warehouse robotics are the only innovation that a majority consider will have a profound impact on the industry.”

 

Perhaps the most interesting recent news on robotics and automation was in an article in Maritime Executive on the Rolls-Royce led Advanced Autonomous Waterborne Applications Initiative (AAWA). The group presented its first findings at a conference, where speakers expressed high hopes for vessel automation in commercial service—and predicted it will arrive soon.

 

“Autonomous shipping is the future of the maritime industry,” Mikael Makinen, president of Rolls-Royce’s marine division, says in the article. “As disruptive as the smart phone, the smart ship will revolutionize the landscape of ship design and operations.”

 

The AAWA initiative’s researchers suggest that engineering hurdles would not be a major obstacle. The technologies needed to make remote and autonomous ships a reality exist: The sensor technology needed is sound and commercially available, and the algorithms needed for robust decision-support systems—the vessel’s “virtual captain”—are not far off, says Jonne Poikonen, senior research fellow at the University of Turku and a leader of the project’s technology research. The challenge, she notes, is to find the optimum method to combine them cost effectively in a marine environment.

 

“This is happening—it’s not if, it’s when,” says Oskar Levander, VP of innovation at Rolls-Royce Marine. “This work supports the development of remote controlled and autonomous vessels and will enable proof-of-concept demonstration following the completion of the project. We will see a remote controlled ship in commercial use by the end of the decade.”

 

  What are your thoughts on robotics and automation? Do you see an increased spend on such technology where you work or throughout the supply chain to gain competitive advantage?

These are exciting times for some automotive manufacturers. From self-driving “truck platoons” in Europe to advancements in autonomous vehicles in the U.S., and even the Tesla phenomena, it appears new vehicle technology is poised to have a significant impact on the automotive industry as well as the creation of new supply chains.

 

Progress continues on “smart” self-driving trucks, and last week in Europe, six truck convoys arrived in Rotterdam as an experiment its organizers say will “revolutionize” future road transport on Europe’s busy highways. More than a dozen trucks produced by six of Europe’s largest manufacturers made the trip, which included border crossings, in truck platoons, says Eric Jonnaert, president of the umbrella body representing DAF, Daimler, Iveco, MAN, Scania and Volvo, Agence France-Presse reports. “Truck platooning” involves two or three trucks connected via wifi that autonomously drive in convoy closely following each other, with the leading truck determining route and speed.

 

The trucks are still in testing phase, and although they are semi-automated and feature computers that allow them to drive by themselves, human drivers were still required to be on-board. Truck platooning is expected to ensure cleaner and more efficient transport because they drive at constant speeds, which reduces both fuel consumption and traffic congestion. Furthermore, self-driving vehicles also contribute to road safety because most accidents are caused by human failure, says the Dutch infrastructure and environment minister, Melanie Schultz van Haegen.

 

There are, however, still obstacles that still need to be addressed. For example, there is a lack of standardized regulations across the European continent to enable self-driving convoys, and there is a need for systems enabling communication between different trucks from different manufacturers, Jonnaert says.

 

In U.S. news, Toyota recently announced plans to collaborate with the University of Michigan to open an “autonomous vehicle research base” near the school’s Ann Arbor campus to focus on autonomous vehicles, the third center under a $1 billion investment by the automaker. The Ann Arbor hub is scheduled to open in June, with an eventual staff of 50 people. About 15 employees from the Toyota Technical Center in York Township who have been doing autonomous-car research for more than a decade, will transfer to the new facility when it opens, the company said.

 

The location will put this arm of TRI close to the University of Michigan’s Mobility Transformation Center, a collaborative facility where industry leaders such as Ford, General Motors, Honda and tier one suppliers work with the Department of Transportation on the future of connected and automated vehicles. It’s also the site of Mcity, a 32-acre complex that simulates urban and suburban driving situations for developing autonomous vehicles.

 

Finally, you may also have seen that in the first 24 hours of Tesla’s Model 3 availability, more than 115,000 customers lined up in stores to pay $1,000 deposits to buy the $35,000 car—a car which won’t even be built until late next year and it will take years to fully ramp up production. Tesla CEO Elon Musk now reports that list has now grown to more than 325,000.

 

Even though gas prices are down and sales of other electric cars are unimpressive, Tesla’s cars appeal to some consumers because they are not only environmentally responsible, they, well, look cool. And they are fast. Last year, Tesla marketed a tech upgrade on its Model S from “Insane Mode” performance to an even swifter “Ludicrous Mode," said to accelerate from 0 to 60 mph in 2.8 seconds.

 

Is Tesla really a threat to GM, Nissan and other electric-car makers, as well as Toyota with its Prius? Critics do note that Tesla has failed to meet expectations before and has never produced huge numbers of vehicles. Then there is the simple fact that Tesla’s ability to build a new supply chain will make or break their business. So much remains to be seen.

 

Nonetheless, it does appear the automotive industry is store for changes, and many new supply chains will need to be formed. It will be interesting to watch.

 

The U.S. Senate approved legislation earlier this week to give companies greater legal protection for their intellectual property, and allow them for the first time to sue in federal court if it’s stolen. The Defend Trade Secrets Act passed 87-0, with strong White House backing. The bill’s supporters hope the unanimous vote will also boost its prospects in the House of Representatives.

 

“Some thieves would rather not go through the trouble of developing products themselves; they’d rather just steal the fruits of others’ creativity,” Senate Majority Leader Mitch McConnell said in urging passage of the bill that, he argued, will “help protect American innovation.”

 

Executives are increasingly concerned with protecting everything from blueprints and industrial designs to business strategies and customer lists against threats, including hacking and rogue employees—and for good reason. Theft of intellectual property, including trade secrets, costs U.S. businesses more than $300 billion a year, according to a 2013 report by the Commission on the Theft of American Intellectual Property, which was written by a bi-partisan group of former U.S. officials.

 

The Defend Trade Secrets Act has received support from a wide range of companies, including Boeing and Johnson & Johnson, and trade groups such as the Biotechnology Industry Organization, the U.S. Chamber of Commerce, and a software lobby whose members include Apple and Microsoft. Earlier this year the White House released a statement noting that the Administration strongly supports the bill as well. In particular, the Administration notes that the bill “would provide important protection to the Nation’s businesses and industries,” and that it would “provide businesses with a more uniform, reliable and predictable way to protect their valuable trade secrets anywhere in the country.”

 

Essentially, the legislation would give companies the right to sue in federal court to recover damages, enforce injunctions and prevent the further dissemination of stolen trade secrets. It would also create a uniform standard for what constitutes trade secret theft. Currently, if companies want to sue, they are relegated to state courts, where there is a patchwork of state laws. Although IP theft is already a federal crime, according to the bill’s sponsors, the U.S. Department of Justice lacks the resources to prosecute such crimes.

 

“Manufacturers in America are the world leaders in innovation. The know-how to perfect their products can take years, even decades,” National Association of Manufacturers (NAM) President and CEO Jay Timmons said in a statement after the Senate approved the bill. “These days, a competitor can steal that knowledge with the click of a mouse, costing a company good-paying jobs or even its entire business. This is a critical issue facing manufacturers, one that will define competition and success in the 21st century. That’s why we need all the tools possible to protect the superior knowledge and products that set our industry apart.

 

“IP can comprise up to 80 percent of the value of a company’s knowledge portfolio, and theft of these resources costs U.S. businesses roughly $250 billion a year,” Timmons continued. “Manufacturers need a strong, unified federal policy that will enforce strict laws to protect what many businesses consider their most valued corporate assets. Today’s vote is a step toward updating our laws and helping manufacturers prevent IP theft aggressively and efficiently.”

 

Protecting valuable product and technology information is increasingly difficult given the exchange of information among global partners and suppliers in the supply chain. In many regards, the threat will continue to grow. On one hand, it’s difficult to say whether the Defend Trade Secrets Act would actually deter companies from trying to steal IP. Then again, the ability to sue in federal court would certainly give companies a viable means to fight back, and, ultimately, may become a deterrent.

 

What are your thoughts on the Defend Trade Secrets Act?

Ford Motor Co. announced earlier this week that it will build a new plant in San Luis Potosi, Mexico, to produce small cars. The new plant will cost an estimated $1.6 billion to build, and construction will begin this summer. It is expected to create 2,800 additional direct jobs by 2020.

 

Specific vehicles to be produced at the new facility have not yet been named, however Ford has been shifting production of its small cars—which have a lower profit margin—to Mexico, where wages for production workers are significantly lower. Last June, for instance, Ford announced it was ending production of its Focus and C-Max at the Wayne Assembly plant in Michigan, and planned to shift production out of the U.S., so there is speculation those vehicles may soon be built in Mexico.

 

“Mexico has more competitive labor costs, supplier costs, good logistics and good support from the government,” Joe Hinrichs, Ford’s president of the Americas, told Bloomberg. “But importantly also, as part of our global manufacturing footprint, Mexico is a good shipping location to many countries around the world with their trade agreements.”

 

The announcement drew a quick response from United Auto Workers President Dennis Williams, who said Ford investing in Mexico is “a disappointment and very troubling,” in a statement.

 

“For every investment in Mexico, it means jobs that could have and should have been available right here in the USA,” Williams said. “This is another example of what’s wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States. Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.”

 

Ford, of course, isn’t the only auto maker investing in Mexico. BMW AG, Volkswagen AG, Toyota, Honda, Kia Motors, Daimler AG and the Detroit Three have all ramped up production in Mexico in recent years. Last year, auto factories in Mexico produced about 3.4 million vehicles, or about one-fifth of North American production, according to LMC Automotive. That figure is expected to jump to 53 percent by 2019.

 

While on the campaign trail, Republican presidential candidate Donald Trump has repeatedly criticized Ford’s investments in Mexico. Shortly after declaring his candidacy in June, Trump vowed he would impose a 35 percent import tariff on any cars built in Mexico that Ford tries to sell in the U.S. Given that background, it wasn’t surprising that after Ford’s most recent announcement, Trump said in a statement, “These ridiculous, job-crushing transactions will not happen when I am president.”

 

What’s puzzling is that Reuters reports data actually indicates Ford builds fewer vehicles and employs fewer workers in Mexico than General Motors and Fiat Chrysler Automobiles’ Chrysler unit. In the U.S., Ford has 55,300 hourly paid plant workers, GM has 54,000 and FCA has 36,600, the companies said. GM has about 12,000 hourly paid workers in Mexico, while FCA has 9,547 and Ford has 6,191, the companies said on Tuesday, Reuters reports. Furthermore, in 2015, 80 percent of Ford’s North American production came from its U.S. plants while 63 percent of GM’s North American production came from its U.S. plants and 64 percent of FCA’s North American production came from its U.S. plants, according to IHS Automotive, Reuters notes.

 

So it’s unclear exactly why Ford itself elicits such a response from the UAW and Trump. Still, it isn’t difficult to see why Ford, and a growing list of other automakers, continues investing in new production capacity in Mexico. Lower labor costs–about $8.25 per hour in wages compared to about $60 per hour in wages and benefits for U.S. workers—and a favorable currency exchange certainly enable companies to have a better chance of turning a profit on low-margin small cars. What’s more, Mexico’s numerous international free trade agreements allow for profitable exports from Mexico to many countries.

 

  It will be interesting to see if automakers continue shifting production to Mexico, especially for smaller vehicles. I am especially curious to see what response future announcements by auto makers receive after the U.S. election this fall.