Ford Motor Co. plans to double vehicle production capacity in Mexico as the auto maker focuses its U.S. assembly plants on more profitable pickups and utility vehicles, according to a report published Feb. 7.
By building a new assembly plant in San Luis Potosi and expanding a plant in Cuautitlan, Ford would add about 500,000 units of annual capacity, the Wall Street Journal report said, citing unidentified sources. The San Luis Potosi plant, which would be able to build 350,000 vehicles a year, was confirmed last month by a Mexican government official who said it would be the country’s largest automotive project this year.
Among the vehicles produced at the Mexican plants would be a hybrid vehicle aimed at competing with the popular Toyota Prius, the Journal said. Automotive News reported in August that Ford was developing a Prius fighter, codenamed C240, to be offered in a variety of hybrid formats.
Ford, which last year announced a $2.5 billion investment to increase engine and transmission production in Mexico, declined to comment. A spokeswoman called the reports on increased Mexican production “speculation.”
Ford built about 439,000 vehicles in Mexico in 2015, roughly one of every seven vehicles it made in North America, according to the Automotive News Data Center.
Ford is expected to shift production of two small cars, the Focus and C-Max, from Michigan to Mexico in 2018. The company said last summer that production of the cars would move, without identifying a new location.
Ford also is consolidating production of its top-selling sedan, the Fusion, in Hermosillo, Mexico, halting output in Michigan. The moves are all part of the four-year contract reached with the UAW last fall, which gave workers raises but afforded the auto maker more flexibility to build vehicles outside the U.S. to compensate for higher labor costs.
But United Auto Workers (UAW) President Dennis Williams has criticized the Detroit 3 auto makers for using lower-cost countries to increase what he said are already healthy profit margins. Ford earned $7.4 billion in 2015. GM, which earned $9.7 billion, is investing $5 billion to double its production capacity in Mexico.
“There’s no reason why we can’t manufacture cars here in the United States of America,” Mr. Williams said.
“They are making huge amount of profits,” he said. “There is no reason mathematically to go ahead and run to countries like Mexico, Taiwan, Thailand and Vietnam.”
Ford’s Cuatitlan plant currently builds the Fiesta subcompact car. It made 105,272 Fiestas last year, an 8.1 percent decline.
Francisco Gonzalez, the CEO of ProMexico, a government agency that encourages international investment in Mexico, was quoted by the financial newspaper La Economista in January as saying Ford would invest at least $1 billion to build a plant in San Luis Potosi. He said auto makers are investing a total of $2.5 billion there in 2016.
The C240 hybrid is expected to arrive in 2018 as a 2019 model. Sources said Ford initially would likely build the vehicle in Michigan, at the plant being vacated by the Focus, but instead the auto maker plans two higher-margin vehicles there: the Ranger small pickup and Bronco SUV.