Ford Motor Company said Friday it will build a new low-cost, small car for the North American market at its Mexican plant as part of a three billion dollar expansion.
The move comes as the company shrinks its US production in the face of declining truck and sport utility vehicle (SUV) sales and is a major blow to the United Auto Workers union, which had campaigned for nearly two years to get Ford to build a new small car in the United States.
“Ford is absolutely committed to leveraging our global assets to accelerate the shift to more fuel-efficient small cars and powertrain technologies that people really want and value,” said Ford president and chief executive Alan Mulally, who was in Mexico for the announcement.
“Our investments in these facilities in Mexico are part of our plan to further realign our manufacturing capacity in line with the introduction of more small cars and crossovers,” he said. Crossover vehicles — SUVs built on a car platform instead of a heavier truck platform — have gained popularity amid soaring gasoline prices.
The announcement flew in the face of UAW President Ron Gettelfinger's statement a half year ago that the major concessions the union made in its 2007 labor contracts were based, in part, on the expectation that Ford would build the car in the United States.
Production of the new low-cost Ford Fiesta is slated to begin at the company's Cuautitlan assembly plant near Mexico City in 2010.
The plant currently builds F-Series pickup trucks for the Mexican market. After the switch, trucks for the Mexican market will be imported from plants in the United States.
Ford also will expand its Chihuahua engine plant to assemble diesel engines for light- and medium-duty trucks in a variety of global markets and establish a new transmission plant in Guanajuato through a joint venture with Getrag.
The three billion dollar investment is expected to increase Ford of Mexico's annual production to nearly 500,000 vehicles and 330,000 engines by 2012, with nearly 80 percent of the vehicles and most of the engines slated for the North American market.
It is expected to create an additional 4,500 jobs.
