Ford cancels plan to build new Mexican plant, adds U.S. jobs

Wednesday January 04, 2017
Written by Dee-Ann Durbin, The Associated Press
Jan. 4, 2017 - The auto industry’s relationship with president-elect Donald Trump took a dramatic turn Tuesday as Ford Motor Co. decided to shift investment dollars targeted for Mexico to the U.S., while Trump threatened General Motors with a tax on some imported small cars.

Ford is cancelling plans to build a new $1.6 billion factory in San Luis Potosi, Mexico, and will instead invest some of that money in a U.S. factory that will build new electric and autonomous vehicles.

Ford said last spring it would move production of the Ford Focus small car to the new plant from Michigan. Trump has repeatedly criticized the plan, and Ford was among the companies he threatened to hit with a 35-per-cent tariff on products made in Mexico and exported to the U.S.

Trump added General Motors to that group today, saying in a tweet that the Cruze small cars GM makes in Mexico and sends to U.S. dealers could face “a big border tax!”

Ford CEO Mark Fields said Tuesday that market forces dictated Ford’s decision not to build the San Luis Potosi plant. Low gas prices and low interest rates have been hammering small-car sales. U.S. sales of the Focus were down 17 per cent through November; by contrast, sales of Ford’s biggest SUV, the Expedition, were up 46 per cent.

Ford will still move production of the Focus to Mexico, but it will go to an existing plant in Hermosillo that makes midsize cars. Ford will hire around 200 workers in Hermosillo to expand production there. The Wayne, Mich., plant that currently makes the Focus will get two new products next year, preserving jobs at the facility.

Fields said Ford will invest $700 million in the Flat Rock plant to make hybrid, electric and autonomous vehicles. It will also hire around 700 workers starting in 2018. In announcing the Michigan expansion, Fields noted Trump’s promise to make the U.S. more competitive by lowering taxes and easing regulations.

Workers lined up on the factory floor cheered the news. United Auto Workers vice president Jimmy Settles, the union’s chief negotiator for Ford, told workers he cried when he heard about the investment. Flat Rock, which employs around 3,200 people, was threatened with closure during the recession. More recently, it has seen temporary layoffs because of slowing sales of one of its products, the Ford Mustang. The plant also makes the Lincoln Continental.

Fields said Ford will save around $500 million overall by cancelling the San Luis Potosi plant.

Among the new vehicles the Flat Rock plant will make is a fully electric SUV that will go 300 miles on a charge. That is due to go on sale in 2020. The plant also will make a hybrid autonomous vehicle that is scheduled to be released in 2021.

Ford also said Tuesday it will release a hybrid version of its bestseller, the F-150 pickup, and a hybrid version of the Mustang in 2020. Two new hybrid police vehicles also are coming over the next five years.

Fields said the company is betting that electric and hybrid vehicle offerings will outnumber traditional gas-powered vehicles in 15 years.

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