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Ford Says Beams Were Up on Aborted Mexico Plant

Jan. 12, 2017
“It’s not an easy decision to cancel a plant that you’ve already started.”

Before Ford Motor Co. (IW 500/4) abruptly canceled a factory in Mexico criticized by President-elect Donald Trump, the foundation was poured, some of the steel beams were up and parts makers were preparing to supply the plant.

The automaker is working now on a plan to compensate those manufacturers and return the land to its owner, the government of Mexico, said Joe Hinrichs, Ford’s president of the Americas. The company intends to eventually disclose the construction cost of the aborted project, he said.

“It’s not an easy decision to cancel a plant that you’ve already started,” Hinrichs said after a speech at Automotive News World Congress in Detroit. “We don’t take it lightly. It was a big decision to build the plant in the first place and it was a big decision to cancel it.”

Ford told Mexico’s government of its intent to scrap the $1.6 billion small-car factory on the morning of Jan. 3, just before making the decision public. The Dearborn, Mich.-based company now plans to build Focus compacts at its existing plant in Hermosillo, Mexico. Executives made the decision when they saw the latest sales projections for the car were lower than anticipated, Hinrichs said.

“We stayed true to our commitment to the Focus program to make it in Mexico,” he said.

Trump Target

Ford has been attempting to make peace with Trump after the president-elect made the company a frequent target of criticism on the campaign trail. The second-largest U.S. automaker canceled the factory last week and said it will add 700 jobs to a plant in Flat Rock, Mich. Trump tweeted his praise and turned his ire toward General Motors Co. and Toyota Motor Corp. for building cars south of the border.

“Ford just announced that they stopped plans for a $1 billion plant in Mexico and they’re going to be moving into Michigan and expanding, very substantially, an existing plant,” Trump said Wednesday during his first press conference since the election. “I appreciate that from Ford. I hope that General Motors will be following, and I think they will be.”

GM spokesman Tony Cervone declined to discuss the company’s manufacturing investment plans. “We look forward to engaging the new administration in conversation,” he said.

Ford has said it’s saving $500 million by moving Focus production to its existing Mexican plant from the now-abandoned site in San Luis Potosi.

The cost to compensate suppliers won’t be “too dramatic,” Hinrichs said. “There’s a lot of manufacturing in that area in central Mexico. So most suppliers are already there anyway. We don’t anticipate any issues, but we’re obviously working with the supply base on that.”

Ford had erected a steel skeleton at the site for the paint shop structure, Hinrichs said. He declined to say, for now, how much Ford had spent on construction that began last spring.

“We’re not giving out that number,” Hinrichs said. “We’ll have more to say about that.”

By Keith Naughton

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