Ford chooses China, not Mexico, to build Focus

Paterniano Del Favero
Giugno 21, 2017

Ford Motor Co said on Tuesday it will move some production of its Focus small auto to China and import the vehicles to the United States in a long-term bet on low oil prices and stable US-China trade relations despite recent tensions.

The current Focus will be phased out of production in Wayne, Michigan in mid-2018, according to Hinrichs.

"We expect no immediate impact on our levels of employment as a result of this decision", Ford de Mexico said in a statement after being asked by Reuters how the announcement would affect its plant in Hermosillo in northern Mexico.

Joe Hinrichs, president for global operations, said the decision to export from the Chongqing plant "was not a variable cost decision", adding that it allows Ford "to free up a lot of capital" with than managing two plants in the United States.

Plans for production of the 2019 Focus - which will be larger and have some significant updates - have bounced around over the last few months as Ford tries to squeeze some profits from the ailing small vehicle segment. But in recent months, Hinrichs explained, the company realized that it could save another $ 500 million in manufacturing tools and costs if it moved production to China.

Ford says no stateside hourly employees will lose their job, and that production of the Focus small auto will continue at the Michigan Assembly Plant through mid-2018. Instead, its investment in the Kentucky plant this time will help secure 1,000 hourly jobs for local residents, in addition to the 2,000 jobs Ford created at the plant in late 2015 with an investment of 1.3 billion US dollars to build all-new Ford Super Duty.

Ford will start building its new small pickup, the Ranger, in 2018, after the Focus moves to China.

The move will save Ford $500m-$1bn more than anticipated when it scrapped plans for the new Mexico plant.

"Labor costs are cheaper in China than they are in Mexico, but of course you have to take into account the shipping costs, which are significantly higher from China", Hinrichs said. Trump heralded that as a victory, even though Ford said it would still build the Focus in Mexico, just at an existing plant. That figure includes vehicles made in China by Ford's joint ventures, as well as Ford and Lincoln imports.

Ford stock fell 0.4 percent at $11.19. They're already making the Focus in China. "We think the significant capital savings outweigh any of the risks associated with any adjustments to the border".

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