Ford Motor Co.
Industryweek 12698 Ford Focus 1

Ford Cancels $1.6 Billion Mexico Plant after Trump Criticism

Jan. 3, 2017
Ford cancelled plans to build a plant in San Luis Potosi and instead will build the Focus in Michigan where it currently assembles the car, which will  protect about 3,500 jobs.

Ford Motor Co. (IW 500/4) will scrap plans to build a $1.6 billion plant in Mexico, after coming under criticism by President-elect Donald Trump for shifting small-car production south of the border.

The next-generation Focus compact car will be built at an existing factory in Hermosillo, Mexico, and Ford will cancel plans to build a plant in San Luis Potosi, CEO Mark Fields said on January 3.

The second-largest U.S. automaker will build two products at a factory in Wayne, Mich., where it assembles the Focus now, protecting about 3,500 jobs.

Fields spoke before a cheering crowd of assembly workers and reporters at Ford’s plant in Flat Rock, Mich., where the company is investing $700 million and adding 700 jobs.

The company said it will add production by 2020 of a fully electric sport utility vehicle with at least 300 miles of range, and an autonomous hybrid vehicle for commercial ride hailing or sharing by 2021 at the Flat Rock factory.

“It is the wrong time to build new plants in Mexico,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said in an e-mail. “Ford will save $900 million, American jobs, and will avoid the risk of a border tax and a smack in the face from the new president.”

The second largest U.S. automaker already builds the Mustang sports car and Lincoln Continental sedan from its Flat Rock plant, which employs more than 3,700 workers. Ford idled the factory for a week in October due to declining Mustang sales, which fell 13% in the first 11 months of 2016.

Until February of last year, Ford also built the Fusion family sedan in Flat Rock. After sales for the model slumped, the automaker consolidated production of Fusion at its primary plant in Hermosillo. Fusion sales fell more than 10% last year through November.

Ford was a target of President-elect Trump during his campaign for plans to move small car production from the U.S. to Mexico. The Dearborn, Michigan-based company changed course on a plan to move production of the Lincoln MKC sport utility vehicle south of the border. Fields said Trump influenced the automaker’s decision to continue building the MKC in a Louisville, Kentucky, factory where it also produces the Ford Escape SUV.

Earlier today, Trump threatened to punish General Motors Co. for building a version of its fading compact car in Mexico, rekindling a months-old feud with the auto industry and earning a terse response from the company challenging his assertions.

Trump said in a Twitter post that the largest U.S. automaker, which manufactures a Chevrolet Cruze hatchback model in San Luis Potosi, should build the car at home or face a hefty tariff. However, GM has sold only 4,900 such hatchbacks north of the border, said spokesman Tony Cervone. The almost 200,000 Cruze sedans that Americans have bought were all built in a plant in Lordstown, Ohio.

By Keith Naughton

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