Ford moving compact car production to China
Several months after scrapping plans to shift production of the next-generation Ford Focus to Mexico, the company now says it will built the compact car in China instead.
Ford was slammed by President Trump repeatedly over the proposed Mexico move and the administration raised the possibly of punitive tariffs for carmakers who located south of the border.
The decision highlights that despite all the bragging from President Trump that he was responsible for scrapping the Mexican deal, Ford was always going to do what made the most sense for its global supply chain.
Word is that Ford Motor, because of my constant badgering at packed events, is going to cancel their deal to go to Mexico and stay in U.S.
— Donald J. Trump (@realDonaldTrump) October 25, 2015
Do you think I will get credit for keeping Ford in U.S. Who cares, my supporters know the truth. Think what can be done as president!
— Donald J. Trump (@realDonaldTrump) October 25, 2015
“Most companies are going to do what affects their bottom line, and what affects their business first,” said Kristen Dziczek of the Center for Automotive Research in Ann Arbor.
Ford claims the move will save the company $1 billion in investment costs versus the original plan for an all-new manufacturing facility in San Luis Potosi, Mexico. Dziczek notes moving production to China probably won’t cost American jobs, for now.
“It’s not going to be a net loss, the plant that currently produces Focus has been down to one shift for quite a while,” Dziczek said.
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While Ford was a relative latecomer compared to GM, China represents a growing market for the American car company. And, since profit margins for compact cars are already razor thin due to low gas prices, tying up domestic production with cars probably isn’t a good idea, said Karl Brauer from Kelley Blue Book.
“Starting with that platform in China makes more sense because other markets are more small car and sedan friendly, while the U.S. has gone so SUV crazy in the last five years,” Brauer said.
Ford isn’t the first U.S. carmaker to import vehicles from China, but the Focus would represent the highest number of Chinese-made cars in American dealerships.
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