Industryweek 10728 Ford Small Car

Ford Announces Plan to Build Small-Car Plant in Mexico

April 5, 2016
The new plant will cost an estimated $1.6 billion to build, and construction will begin this summer, Ford said in a statement today.

Hours after announcing it will create 1,200 new auto worker jobs in South Africa, Ford rolled out plans to build a new small car plant in San Luis Potosi, Mexico, creating 2,800 jobs there.  

The new plant will cost an estimated $1.6 billion to build, and construction will begin this summer, Ford said in a statement today.

Ford is investing $1.6 billion USD in the facility, which begins construction this summer. The new plant will create 2,800 additional direct jobs by 2020. 

Specific vehicles being produced at the new facility will be announced later. Ford has been shifting production of its small cars with a lower profit margin to Mexico, where wages for production workers are much lower.

Last June, Ford announced it was ending production of the Focus and C-Max at the Wayne Assembly plant in Michigan and moving production out of the U.S.

Ford wants “improve the profitability of our small-car lineup,” said Joe Hinrichs, its president of the Americas.

United Auto Workers President Dennis Williams called the company’s plan “very troubling” in an interview with Bloomberg and said the investment means creating jobs that “should have been available right here in the U.S.A.” The UAW response echoes criticisms directed at the automaker since last year by Republican presidential candidate Donald Trump.

“Mexico has more competitive labor costs, supplier costs, good logistics, good support from the government,” Hinrichs told Bloomberg. “But importantly also, as part of our global manufacturing footprint, Mexico is a good shipping location to many countries around the world with their trade agreements.”

Hinrichs said the new Mexico factory is “consistent with the discussions we had with the UAW last fall” during successful negotiations for a new four-year contract.

Williams said the company’s decision reveals the shortcomings of the North American Free Trade Agreement and the proposed Trans-Pacific Partnership trade pact.

“This is another example of what’s wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States,” Williams said. “Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.”

Mexico is Ford’s fourth largest vehicle manufacturing site for global customers -- behind the U.S., China and Germany. Vehicles produced in Mexico also serve customers in the U.S., Canada, China, Argentina, Bolivia, Brazil, Colombia, Chile, Paraguay, Peru, Uruguay and South Korea.

The investment is part of the company’s One Ford global product and manufacturing plan. During the past five years, Ford has invested $10.2 billion in its U.S. facilities, $2.7 billion in facilities and supplier tooling in Spain, $2.4 billion in Germany and -- with Chinese partners -- $4.8 billion in China.

Bloomberg contributed to this article.

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!