DETROIT—Ford Motor Co. plans to build a new $1.6 billion auto assembly plant in Mexico, creating about 2,800 jobs and shifting small-car production from the U.S. at a time when moving jobs south of the border has become a major issue in the U.S. presidential campaign.
The company announced the plant in the San Luis Potosi state on April 5 without saying specifically what cars it will build there. But the United Auto Workers (UAW) union has said Ford plans to shift production of the Focus compact and C-Max small gas-electric hybrid from suburban Detroit to Mexico, where the cars can be made cheaper and more profitably.
The UAW’s new four-year contract with Ford, signed last year, guarantees new vehicles for the Wayne, Mich., assembly plant in 2018 and 2020 and a $700 million investment that preserves the plant’s 3,924 jobs. Union members have said they expect the factory to get a new version of the Ranger small pickup and a new small truck-based SUV called the Bronco.
Ford announced the move on the day of the key Wisconsin primary. Outsourcing jobs has been become a campaign issue largely because of Republican front-runner Donald Trump, who has railed about corporate America moving jobs to Mexico to take advantage of what he calls a lopsided trade agreement. He has vowed to rewrite the 1994 North American Free Trade Agreement, tax imports and punish U.S. companies including Ford.
Auto and other manufacturing jobs having been moving south for years. Mexican auto production more than doubled in the past decade, and the consulting firm IHS Automotive expects it to rise another 50 per cent to just under five million by 2022. U.S. production is expected to increase only three per cent, to 12.2 million vehicles, in the next seven years.
Joe Hinrichs, Ford’s president of the Americas, said Ford is a global automotive company that builds cars where it makes the most sense for the business. He confirmed that the new plant would build small cars starting in 2018.
"We’ve talked about improving our small-car profitability and this is an important part of that,” he said in an interview with The Associated Press.
Trump began criticizing Ford since last summer after the company said it planned to invest $2.5 billion in engine and transmission plants in Mexico.
Hinrichs said the timing of the plant announcement had nothing to do with the presidential race, but instead with the timing of construction, due to start this summer.