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18. December 2016

MEX - Ford to proceed with shift of small-car output to Mexico

MEX - Ford to proceed with shift of small-car output to Mexico

Ford will forge ahead with shifting small-car production to Mexico despite repeated criticism from president-elect Donald Trump, who has warned that companies face consequences for leaving the US.

Ford’s plan to rehouse output of the Focus compact car from Michigan to a new $US1.6 billion ($2.1bn) plant being built in ¬Mexico, which isn’t expected to result in job losses, remains on track for 2018, chief executive Mark Fields said.

“We have made the decision to move the Focus out, and we’re making that investment now,” Mr Fields said. “When you look at moving the Focus out of our Mich¬igan assembly plant, that’s to make room for new products — zero jobs affected, zero jobs impacted.”

The Dearborn, Michigan, carmaker is expected to replace the cars headed to Mexico with more-profitable utility trucks and sports-utility vehicles to keep the Michigan plant humming amid soaring demand for such vehicles. Unionised autoworkers would keep their jobs and potentially receive larger profit-sharing cheques should Ford’s operating profits in North America increase. Mr Field’s remarks came a day after Mr Trump took credit for United Technologies’s decision to keep open a Carrier Corporation furnace factory in Indiana and prevent about 800 jobs from moving to Mexico. In exchange, United Technologies, Carrier’s parent, will receive $US7 million in tax breaks over the next decade.

“This isn’t a Carrier situation,” Mr Fields said of Ford’s plan. He said Ford decided to produce the car in Mexico partly to keep the vehicle’s price in line with customer expectations. “In our business, it’s a long-lead investment,” he said of the Focus plan.

He added that Ford’s US investment commitments remain “as strong as ever”, pointing to the company’s commitment to invest $US9bn in its US plants over the next three years as part of a new ¬labour contract struck last year with the United Auto Workers union. The investment would support or create 8500 blue-collar jobs at Ford’s US plants.

Vice-president-elect Mike Pence, currently Indiana’s governor, helped broker the Carrier deal. Carrier still plans to move 600 jobs from the factory to ¬Mexico, and United Technologies intends to proceed with closing a separate plant in Huntington, Indiana, moving another 700 jobs across the southern US border.

Mr Trump has said companies going forward would no longer “leave the US anymore without consequences”. He has threatened to slap Ford and other manufacturers with a 35 per cent tariff for importing goods from countries with lower labour costs. The pledge resonated with blue-collar workers, helping Mr Trump win close election battles in Wisconsin, Michigan and Pennsylvania, the three decisive states that propelled him to the White House.

Mr Fields said Ford would weigh future Trump administration policies when pursuing business matters. He said Mr Trump had “an influence” on the carmaker’s decision not to move production of a Lincoln SUV from Louisville, Kentucky, to Mexico. “We had been looking at it,” Mr Fields said, adding that it “made sense” to keep the vehicle in Kentucky, given Mr Trump’s positions on tax reform and infrastructure spending.

Ford never intended to close the factory or cut jobs, but rather ramp up production of another hot-selling SUV, rendering it a largely symbolic move. Mr Trump two weeks ago took credit on ¬Twitter for Ford’s decision, but overstated the move, suggesting Ford would no longer relocate the factory to Mexico.

Source: theaustralian.com.au

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