Thread: Ford cancels Mexico plant, expands U.S. factory

Ford cancels Mexico plant, expands U.S. factory

Nathan Bomey , USA TODAY
12:28 p.m. EST January 3, 2017


(Photo: Ford Motor Company)


Ford Motor announced Tuesday that it would cancel plans for a $1.6 billion Mexico plant and launch a Michigan expansion in a move that may be viewed as a capitulation to Donald Trump.

Ford CEO Mark Fields said the company would spend $700 million and add 700 jobs to "transform and expand" its Flat Rock, Mich. manufacturing plant, where it will make autonomous and electric vehicles.

"Make no mistake about it — Ford is a global automaker but our home is right here in the United States," Fields said at a press conference.

The move marks a sharp reversal for Ford, which has defended its production in Mexico even as Trump has assailed the company for expanding there.

"This is a vote of confidence for President-elect Trump and some of the policies he may be pursuing," Fields said.

To be sure, Ford acknowledged in a statement that it would still move production of the next-generation Focus sedan to Mexico. But it will be built at an existing plant in Hermosillo, Mexico, not at a new facility.

President-elect Donald Trump is going after General Motors giving them an ultimatum when it comes to manufacturing across the border. Veuer's Nick Cardona tells us what the President-elect had to say. Buzz60


The United Auto Workers hailed the decision.

"We've seen our jobs go overseas," UAW Vice President Jimmy Settles said. "It's evident today that Ford is rewarding us for our hard work."

Others will view the move as a bid to satisfy Trump, who has cited Ford's Mexico expansion as a key example of how the North American Free Trade Agreement has weakened American manufacturing.

"Automakers are facing a situation where they have to consider the political consequences" of all their decisions, AutoTrader.com analyst Michelle Krebs said.

Ford's expansion will convert 700 temporary jobs at the Michigan plant into permanent positions, adding to an existing hourly staff of about 3,600.

The plans are part of a broader $4.5 billion investment in electric vehicles and hybrids, including 13 new models over the next five years.

Those vehicles include a small, electric sport-utility vehicle with 300 miles of battery range, which will be exported overseas, and a "high-volume autonomous vehicle designed for commercial ride-hailing or ride-sharing," Ford said in a statement.

The company will also manufacture a hybrid version of the F-150 pickup truck by 2020 at the Dearborn, Mich., plant, where the F-series lineup is currently manufactured.

http://www.usatoday.com/story/money/...o-us/96106334/

Donald Trump, GM, Ford and the Made-in-Mexico Car

Despite Ford’s latest move, and the president-elect’s rhetoric, Mexico is poised to become a bigger auto industry player

ENLARGE
A person views the interior of a Honda Motor Co. Fit subcompact vehicle at the company's transmission plant in Celaya, Mexico, in October 2015. PHOTO: SUSANA GONZALEZ/BLOOMBERG NEWS


By JOHN D. STOLL
Updated Jan. 3, 2017 1:59 p.m. ET0 COMMENTS

Donald Trump on Tuesday stepped up criticism of the auto industry’s use of Mexican factories as a way to lower manufacturing costs, ripping into General Motors Co.’s decision to import a modest number of Chevy hatchbacks from Mexico to U.S. dealerships. Hours later, Ford Motor Co. said it was altering its own small-car production plans for Mexico after facing the president-elect’s barbs for more than a year.

Here is a rundown of how the two biggest auto makers fit into wider concern about the future of the American car as supply chains become more global and a look at how big a task it would be to reverse the Made-in-Mexico car trend:

How is Ford changing its plans, and why is GM involved?

Ford still will shift its Focus production to Mexico as American demand for compacts and sedans fades, but it will use existing plants there instead of building a new $1.6 billion factory that has been in the works for more than a year. The company said this move will free up $700 million to create 700 jobs at a plant in Michigan that needs to be retooled for electrified versions of SUVs and other vehicles. This comes shortly after Ford decided not to move production of a small Lincoln SUV from Kentucky to Mexico.

TRUMP AND THE AUTO INDUSTRY

• Ford’s Move Is a Surprise Turnaround
• Trump Targets GM on Mexico Imports
• Trump’s Pick for Trade Representative Signals Focus on Curbing Imports
• Auto Makers Struggle With Collapse in Demand for Small Cars (Dec. 31, 2016)
• Trump, Ford and Kentucky Jobs: What’s Really Happening (Nov. 1
• Trump’s Nafta Plan Would Confront Globalized Auto Industry (Nov. 10, 2016)

GM and smaller rival Fiat Chrysler Automobiles NV also have ambitious plans for Mexico production, but neither have gotten the same level of attention from Mr. Trump that Ford has received. That changed Tuesday when Mr. Trump said GM should be paying taxes for the Chevrolet Cruze hatchbacks that are made in Mexico and sold in the U.S. GM has built a more conventional version of the Cruze in Ohio for several years, but it is currently cutting jobs at that factory because of weak demand for that version.

Will Ford’s decision to appear willing to work with Mr. Trump affect GM, others?

The immediate focus will be on whether GM chooses to retool that Ohio plant to make hatchbacks, which are more popular than bread-and-butter compact cars and a potential winner for Chevy’s lineup. The bigger question is whether the wave of auto makers migrating to Mexico can be stopped and the trend to put an increasing amount of foreign parts in American cars can be stemmed.

What about the supply of parts? Even if cars are assembled in Ohio or Michigan or another state, components come from all over.

The fact is, American cars are becoming less American. The model-year 2017 Cruze, for instance, relies on the U.S. or Canada for only 44% of its parts content, compared with 60% in 2012, according to the National Highway Traffic Safety Administration, which compiles data annually on where the individual parts content of vehicles originate. NHTSA only provides data for combined Canada and U.S. production.
According to preliminary data provided by NHTSA, 51% of the content on 2017 model-year light vehicles built by Ford, GM and Fiat Chrysler Automobiles NV came from the U.S. or Canada, down from 53% in the prior-year model. The United Auto Workers, in fact, has defended Mr. Trump’s trade views because union officials say free-trade deals like Nafta have encouraged offshoring of steering wheels, seats, axles, engines and thousands of other parts for decades.

Could Mr. Trump’s recent moves fortify the American car industry?

Auto makers are expected to boost reliance on foreign sources of parts because global parts supply chains are increasingly woven together. And, while Ford’s decision will reduce the amount of physical factories global auto makers have in Mexico, it won’t change the fact that Mr. Trump’s administration is entering a four-year stretch where Mexican vehicle assembly will skyrocket if nothing else changes because car companies appreciate the low wages in Mexico and rely on the nation’s arsenal of free-trade deals with countries all over the world to keep Mexico as an attractive export base.

In 2016, there were 17 assembly plants in Mexico, and by 2020 there will be at least 20 even after the Ford move.

Nissan Motor Co. and Daimler AG are constructing a plant together in Mexico, and others—including Volkswagen’s Audi AG Honda Motor Co. and Kia Motors Corp.—have or are in the process of adding plants there.

Auto makers produced 3.4 million vehicles in Mexico in 2016 and that figure is expected to grow 50% to 5.1 million by the end of the decade, taking Mexico’s percentage of North American vehicle light vehicles from 19.4% today to 27.9% in 2020, WardsAuto.com estimates. The U.S. percentage is expected to fall from 67.2% to 61.9%, with production slipping 6% to 11.2 million. About 45% of Mexico’s growth will be driven by added capacity by Detroit’s Big Three auto makers, according to WardsAuto.com.

http://www.wsj.com/articles/donald-t...car-1483469900