359. Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1

SUBJECT

  • Ford’s Difficulties in Mexico

The attached memorandum from Tony Solomon 2 describes a serious problem the Ford Motor Company is having with its operations in [Page 761]Mexico. He suggests that you mention the matter to President Diaz Ordaz.

The difficulty in a nutshell is this:

Ford built a plant in Mexico City to produce sophisticated assembly-line production tools. It exports about $5 million worth of these per year. Part of the deal was that in exchange for this investment the Mexicans would add 5000 units to Ford’s basic quota of automobiles (20,000) produced in its car plant. The tool plant is a marginal operation. The car plant is profitable only with the additional quota.

The Mexicans, in a move to force Ford to allow Mexican capital to buy into the company, (i.e., Mexicanization program), has told Ford that it can no longer have its extra quota of cars. Ford has gained a temporary reprieve, but says that it will close down its tool plant operation unless it is allowed to retain its additional quota.

We feel that Ford is being unfairly treated. They built the tool plant in the understanding that they could produce more cars. This understanding is being withdrawn. We think it is bad for Mexico and our whole Alliance for Progress effort to have private enterprise in an attractive venture as tool-making squeezed out.

Consequently, Tony suggests that you propose to President Diaz Ordaz that he appoint someone from his personal staff to go into the problem quietly with your representative.3 As Tony notes, it would not be productive to have Secretary Rusk raise this with Carrillo Flores, since he would have to turn it over to his Cabinet colleague who is behind the squeeze.

I concur in Tony’s suggestion.

Walt

I’ll make the proposal4

Prefer not to

See me

  1. Source: Johnson Library, National Security File, Country File, Mexico, Diaz Ordaz Visit, Background and Misc., 10/26–28/67. Confidential.
  2. Attached but not printed.
  3. Rostow added the following suggestion: “For example, Tony Solomon.”
  4. This option is checked. According to a handwritten note on the memorandum, the President told Jim Jones: “Be sure I’m reminded of this.” No evidence has been found that Johnson raised the issue with Díaz Ordaz during the state visit.