Ford to Save $1 Billion Building Focus in China Instead of Mexico
Ford Motor Co. is canceling controversial plans to build the Focus small car in Mexico, saving $1 billion by ending North American production entirely and importing the model mostly from China after next year.
The U.S. automaker will start making the next-generation Focus in China from the second half of 2019, a year after output ends at one of its plants in Michigan. Ford’s savings will come from canceling plans to assemble the car at an existing factory in Mexico and a decision made in January to abort construction of a plant in Mexico.
With its latest move, Ford has fully abandoned its strategy of relocating small car production to Mexico that had been announced last year by then-Chief Executive Officer Mark Fields. Fields was replaced as CEO last month by Jim Hackett, former CEO of office-furniture maker Steelcase Inc. The company will be testing both consumer appetite for China-built cars and the tolerance of President Donald Trump, who has criticized automakers for importing vehicles from overseas.
“We’ve done a lot of research and consumers care a lot more about the quality and the value than they do about the sourcing location,” Joe Hinrichs, Ford’s president of global operations, said in a conference call with reporters Tuesday. “iPhones are produced in China, for example, and people don’t really talk about it.”
Ford said it’s also investing $900 million at its truck factory in Kentucky to build Expedition and Lincoln Navigator sport utility vehicles, preserving 1,000 jobs.
After importing initial production of the new Focus cars from China, Ford will ship variants of the model later from Europe, the company said. The Michigan Assembly Plant now making the Focus will be retooled to produce the Ranger midsize pickup in late 2018 and the Bronco midsize SUV in 2020.
“China gets a lot of attention, we’ll see how this plays out,” Hinrichs said in response to a question about possible criticism of the move from Trump. “But we believe this is a much better plan for our business globally. And it frees up from the original plan about $1 billion of capital that we can reinvest in the business, including exciting things that we’re working on in autonomy and electrification and a lot of that work is done right here in the U.S.”