Ford has confirmed that in the next two to three years, all of its small cars now built in the US will instead be produced in Mexico.
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The updated outlook was presented Wednesday by Ford President and CEO Mark Fields at the company’s annual investor day.
Within the next two years, Ford will no longer build any small cars in the United States, the automaker said Thursday.
The Ford Fiesta subcompact is already being assembled in Mexico. These include the Mustang and Taurus and soon, the new Lincoln Continental. There is an expectation that Ford will build a new Ranger mid-size pickup truck in Wayne and possibly a new Bronco compact sport-utility.
Speaking in Flint, Michigan, the economically depressed former home of General Motors most recently wracked by a scandal over its contaminated water supplies, Trump said Ford’s move was another example of the erosion of US industry helped by open borders for trade with Mexico.
A worker in Mexico costs auto companies an average of US$8 an hour, including wages and benefits, compared to US$58 in the USA for General Motors and US$38 at Volkswagen, the lowest hourly cost in the USA, according to the Center for Automotive.
In recent years, automakers including General Motors, Honda, Hyundai, Nissan, Mazda, Toyota and Volkswagen have all announced plans to either expand existing plants or build new ones in Mexico. “We are not naive”. The second-largest USA automaker said it plans to trim costs annually by $3 billion between this year and 2018, and is “re-evaluating” its strategy and business model in India. Last fall, the automaker made a commitment to invest $9 billion in USA plants and create or retain more than 8,500 jobs as part of a new four-year contract with the UAW.
But it is aggressively investing in emerging opportunities, including the electrification of its vehicle fleet and the development of autonomous cars.
Ford plans to roll out in 2021 its fully autonomous vehicle with no steering wheel or pedals, selling about 100,000 a year for commercial purposes only.
“We have always strictly complied with all Indonesia government regulations and policy, including all import-related tax and customs requirements, related to each of our Ford vehicles officially marketed and sold in the country”, he said.
The 113-year-old company this year has unveiled a flurry of partnerships and investments, reminiscent of the company’s frenzy 15 years ago during the dot-com bubble to develop new ventures and acquire luxury brands.
“This is very different thinking for us”, Fields said.
“It’s quite natural for these auto companies to focus their US based operations on making larger vehicles where the margins are much greater”, he continued.
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At the same time, Ford has come under the spotlight recently in view of what analysts have said is a paltry investment into mobility startups compared with other automakers, despite the fact that Ford recently stated that “autonomous vehicles could account for up to 20 percent of vehicle sales by the end of the next decade”. Fields is expected to highlight the prospects for Ford to jump-start growth over the next several years by developing new businesses using autonomous, or self-driving, vehicles and internet-enabled services such as shuttle vans that can be hailed using a smartphone app.
