Ford

One of President-elect Donald Trump’s campaign predictions came true Tuesday as Ford Motor announced it is scrapping a plan to build a $1.6 billion factory in Mexico and will instead invest $700 million in a Michigan plant.

The automaker had planned to build small cars at the proposed factory in San Luis Potosi, Mexico. Ford CEO Mark Fields said the decision to cancel the plant reflected declining sales of small cars as well as the pro-business climate it expects under Trump.

“We look at all the factors, and our view is we see a more positive U.S. manufacturing business environment under President-elect Trump and the pro-growth policies and proposals that he is talking about, so this is a vote of confidence for President-elect Trump and some of the policies that they may be pursuing,” he told reporters.

Fields told Fox Business that Ford would have made the same decision even if Trump had not been elected. “There was no quid pro quo because there was no negotiation” with Trump over the decision to cancel the plant, he said.

During his presidential campaign, Trump sharply criticized Ford and other companies for moving manufacturing jobs to Mexico. In announcing his candidacy in June 2015, he predicted Ford would cancel its Mexican investments.

“They’ll say, ‘Mr. President, we’ve decided to move the plant back to the United States — we’re not going to build it in Mexico.’ That’s it. They have no choice,” Trump said.

Rather than build the San Luis Potosi plant, Ford will spend $700 million to manufacture hybrid, electric and autonomous vehicles at its Flat Rock, Mich., plant, adding 700 jobs there.

“Our commitment to the U.S. has always been there,” Joe Hinrichs, president of Ford’s Americas group, told Reuters. “It’s our home. It’s our largest market.”

But the company is not abandoning Mexico, where it will build its next-generation Ford Focus at an existing plant in Hermosillo, freeing up capacity for “two new iconic products” to be manufactured at its Wayne, Mich., factory.

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