Trump’s victory lap back in January after Ford cancelled plans for a brand new $1.6 billion production facility in Mexico may have been premature. As it turns out, per a press release from earlier this morning, one of the first strategic actions taken by Ford’s new CEO, Jim Hackett, will be to relocate the company’s ‘Focus’ production to China rather than Mexico.
Back in January, Trump took a very public victory lap when Ford decided to scrap plans to build a $1.6 billion manufacturing facility in Mexico and invest in its Michigan facilities instead (we discussed it here: Trump Takes Victory Lap After Ford Cancels $1.6 Billion Mexican Expansion Plan As “Vote Of Confidence” In President-Elect).
As Ford announced at the time, the decision was sold to the public and the United Auto Workers as an opportunity to permanently shift production capacity, that would have otherwise been built in Mexico, back to Wayne, Michigan.
To support the new era of vehicles, Ford is adding 700 direct new U.S. jobs and investing $700 million during the next four years, creating the new Manufacturing Innovation Center at its Flat Rock Assembly Plant.
Ford today announced it is cancelling plans for the new plant in San Luis Potosi, Mexico. It also announced that, to improve company profitability and ensure the financial as well as commercial success of this vehicle, the next-generation Focus will be built at an existing plant in Hermosillo, Mexico. This will make way for two new iconic products at Michigan Assembly Plant in Wayne, Michigan, where Focus is manufactured today – safeguarding approximately 3,500 U.S. jobs.
This incremental investment in Flat Rock Assembly Plant comes from $1.6 billion the company previously had planned to invest in a new plant in Mexico.
“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” said Jimmy Settles, UAW vice president, National Ford Department. “The men and women of Flat Rock Assembly have shown a great commitment to manufacturing quality products, and we look forward to their continued success with a new generation of high-tech vehicles.”
But, as Ford points out today, Trump’s victory lap may have been premature as one of the first strategic actions taken by the company’s new CEO, Jim Hackett, will be to relocate the company’s ‘Focus’ production to China rather than Mexico.
Exciting new Ford Focus on the way for North American customers beginning in 2019 with more technology, more space and a number of new Focus models. Next-generation Focus for North America will be globally sourced primarily from China – rather than Hermosillo, Mexico – with production starting in the second half of 2019. Current model production ends in mid-2018
This manufacturing plan allows the company to further grow its leadership as an exporter and deliver world-class Focus to North American customers in a way that makes business sense – with no U.S. employees out of a job
Ford is saving $1 billion in investment costs versus its original Focus production plan, improving the financial health of its Focus business and further improving manufacturing scale in China – all helping create a more operationally fit company
And while Ford has suggested that the move will not cost a single UAW worker his/her job here in the United States, we have our doubts as manufacturing capacity, much like cash, is somewhat fungible…so unless Ford plans to massively grow market share and/or permanently increase overall demand, shifting production to China must mean that production will decline somewhere else…we suspect that ‘somewhere else’ will be somewhere in the U.S.