Excerpted from The Detroit Free Press: Ford is shifting all North American small-car production from the U.S. to Mexico, CEO Mark Fields told investors today in Dearborn, even though its plans to invest in Mexico have become a lightning rod for controversy in this year’s presidential election.
“Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States,” Fields said.
Ford isn’t the first automaker move small car production out of the U.S. as Mexico has become a mecca for new automotive industry investment and has surpassed Canada in annual automotive production.
Still, the news sparked a fresh round of criticism from Republican Presidential candidate Donald Trump, who was in Flint on Wednesday.
“We shouldn’t allow it to happen. They’ll make their cars, they’ll employ thousands of people, not from this country and they’ll sell their car across the border,” Trump said. “When we send our jobs out of Michigan, we’re also sending our tax base.”
Fiat Chrysler Automobiles said earlier this year it will end production of all cars in the U.S. by the end of this year as it discontinues production of the Dodge Dart in Belvidere, Ill. and the Chrysler 200 in Sterling Heights, Michigan.
The industry has known for decades that domestic manufacturers struggle to make a profit on small cars in the U.S.
In recent years, automakers that include General Motors, Honda, Hyundai, Nissan, Mazda, Toyota and Volkswagen have all announced plans to either expand existing plants or build new ones in Mexico. Fiat Chrysler Automobiles also has said it is considering an expansion of its production there.
Mexico has seen a 40% increase in auto jobs since 2008 to 675,000 last year while the U.S. saw only a 15% increase in the same period to more than 900,000, according to the Center for Automotive Research in Ann Arbor.
While the North American Free Trade Agreement has been a factor for automotive investment in Mexico there are other factors as well. Mexico has trade agreements with 44 other countries, a robust rail and shipping infrastructure, lower wages and now workforce that has proven it can make high-quality cars.
Ford’s decision to shift the assembly of small cars to Mexico can reduce costs to a point. But some of these cars are over-engineered.
For example, Fields said the current Ford Focus can be ordered in 300 different configurations of options and colors. Ford wants to reduce that to 30, which will make the production process simpler and less expensive.
But Americans prefer larger vehicles, especially pickups and higher-riding SUVs and crossover vehicles for their personal use.
Fields’ statement isn’t much of a surprise. Ford said in April it would invest $1.6 billion to build a new plant in Mexico and create 2,800 jobs so it can build small cars there. Ford also said in 2015 that it planned to move production of its Ford Focus and C-Max hybrids cars from a plant in Wayne, to another country by 2018.
It’s an ironic twist for Ford’s plant in Wayne, Michigan. Ford spent $550 million in 2010 to convert from the aging plant from a big SUV factory to one that could build the efficient Focus compact car. Keep reading